By Donnell Rehagen, Chief Executive Officer at National Biodiesel Board
Special to The Digest
This year has been brutal for the biodiesel industry. As if the absence of the biodiesel tax credit wasn’t enough of a challenge, these unjust retroactive small refinery waivers are destroying the biodiesel market and devastating farmers and the workers we support.
The EPA has begun routinely undercutting the demand for biodiesel and renewable diesel by giving small refinery waivers to everyone who asks. The agency is making no effort to ensure renewable volume obligations it sets are met following the waivers. In fact, the agency falsely suggests recent court decisions force it to grant all these waivers.
It’s clear that small refinery waivers are allowed in the RFS law. What is unclear is why the EPA changed the rules of the game over the last couple of years. Instead of granting waivers very judiciously, as the agency did for the previous years, this EPA granted nearly every exemption requested in 2016 and 2017.
Philadelphia Energy Solutions was the posterchild for economic hardship, supposedly resulting from the RFS. In 2018, the ownership filed for bankruptcy and then begged EPA to wipe away its overdue RFS obligations, claiming it was necessary to protect the jobs of the refinery’s workers. After at least 10 meetings with the PES owners, EPA waived $175 million worth of required RFS credits, which reduced demand for hundreds of millions of gallons of biodiesel and ethanol. But the RFS was never the cause of PES’s problems. And no amount of favors from EPA could save the jobs at that refinery.
For our industry, the RFS rules have been the same since the beginning. The EPA sets the annual volume target. We plan and invest accordingly to produce those volumes. These refinery waivers act to reduce the demand after those volumes and investments have been put into place. All so some of the largest corporations in the entire world can save some money. Just based on the reported quarterly earnings from some of those major corporations who have received these waivers, I think they are doing just fine for themselves.
Has EPA forgotten about the small entrepreneurs that have answered the government’s call to build biodiesel plants and to use what has generally been a zero-value waste stream of feedstock to make one of the best and cleanest fuels on the face of the planet?
This lack of checks and balances is undermining our industry’s ability to grow as it is totally capable of doing thereby providing even higher volumes of cleaner liquid fuels to the marketplace.
Professor Scott Irwin, Laurence J. Norton Chair of Agricultural Marketing at the University of Illinois, estimates that the economic losses for our industry could exceed $2 billion each year with total losses of $7.7 billion for the 2017 to 2019 period.
Now, EPA believes the approval of year-round E15 sales will make up for the damage from these waivers. It will not. We are happy for our friends in the ethanol industry and happy for our planet that more ethanol will be in use. But, the truth of the matter is E15 does nothing to help biodiesel producers. In fact, one could argue, it actually harms the biodiesel industry due to the way the RFS is built with its nested categories of biofuels.
It’s disheartening that an EPA leader tasked with administering such an important program as the RFS has such little understanding of how it really works.
Biodiesel is an important market. We owe it to our producers who took signals of support years ago and invested their hard-earned money to grow production and add value to the supply chain. We need to see those same strong signals and have the rules applied fairly and consistently going forward so those investments can expand and we can experience the growth in our industry that so many count on.
In a recent letter sent to EPA Administrator Wheeler, NBB stated, “EPA is required to repair the demand destruction for biodiesel and renewable diesel resulting from the agency’s flood of unwarranted, retroactive small refinery exemptions.”
The biodiesel industry is asking for fairness from the EPA. No more seeking opportunities to help major corporations save on their compliance costs at the expense of biodiesel and renewable diesel producers. No more changing the rules in the middle of the game.