Status of the Biodiesel Tax Credit – 2015

Biodiesel Turnaround?

2014 and 2015 have been difficult years for the biodiesel industry.   Indeed, many of the producers that are comparable or smaller in size to TBI have experienced significantly reduced production, idling, or even closure.   Many biodiesel plants have been forced to just collect WVO and sell it into the feed industry, thus not really acting like a biodiesel refinery as much as they are waste vegetable oil aggregators.  Of particular concern is the lack of consistency in the regulatory standards and subsidies that have been in play for 2014 and 2015.  That appears to all be changing soon however.   Calls into congressional offices and information from the NBB leads us to several conclusions (or assumptions, depending upon who you ask):

What’s in play:

  1. The EPA will finalize volume requirements for 2014 and 2015 and resolve a pending waiver petition for 2014, and also finalize RFS volume requirements for 2016 .   This has already yielded a slight increase in RIN pricing for 2015 and a premium for 2016 RINs (2016 Biodiesel RIN futures might be a good thing to buy right now, if you can get them).
  2. The Biodiesel tax credit is expected to be voted on under the Tax Extenders package as a part of the Omnibus bill.  This is expected to be put on the floor of both the Senate (S 1946) and the House (H.R. 4040, et. al.).

Biodiesel Tax Credit

As this is the most important to biodiesel producers, we’ll start here.   These bills are expected to go to the floor sometime after Thanksgiving, most likely in the December short session.  This gives roughly 12 working days on the Congressional calendar for Congress to pass the bill in both the House and Senate.  The good news is that they have passed through the committee, and are ready to go to the floor.

Assuming we don’t have more important pressing bills that need debate (such as blocking Syrian refugee aid or not), it appears we might have the tax credit passed as part of the Omnibus package by the end of the year.   This currently is set as a “back one, forward one” credit for retroactive sales in 2015 and forward for 2016.  Further, the 2016 year would be a producer’s credit, limiting the credit to be only available to active biodiesel producers.  Needless to say the petrochemical industry does not like this, as they no longer get to put their hand in our cookie jar, but I predict Congress in it’s usual ineptitude will leave enough loop holes in the legislation to allow for Big Oil to get it’s fair share of our revenue stream.   For now at least, 2 years looks to be about the most we can get for the biodiesel tax credit.  This is far below the needed 3 to 5 years for a reliable tax credit program to bring stability to the biodiesel industry.  But when I’ve asked specifically what was impeding a multi-year tax credit more than  2 years, I was informed that the primary concern was the Obama administration’s repeated claims that they would veto any multi-year tax credits which would impede funding their programs.   So the most likely and high probability beneficial outcome for our industry is to be conservative about the timeframe and stuff it into a large, encompassing package such as Omnibus to ensure that there’s enough pork for everyone to get passed.   And there you have it, Beltway gridlock at it’s finest.


The EPA Renewable Fuel Standard drama seems to be coming to a businesslike conclusion, with some reasonable expectations for production in the biodiesel spectrum (I won’t address the blend wall issue craziness for ethanol.  Not my circus, not my monkeys).  The incremental increases while not substantial relative to the domestic production capability, at least ARE increases and can be met by the industry and consumed by the obligated parties without much suffering and stress.

Similar to the biodiesel tax credit loophole, particular interest needs to be pointed at the EPA program allowing imported biodiesel to be permitted to generate renewable fuel credits and cashing them in at the expense of the taxpayer.  That creates an uneven playing field for domestic producers, and effectively functions as a subsidy to foreign countries at the taxpayer’s expense.  The regulatory logic is that it benefits the consumer by providing a renewable carbon neutral fuel supply to help offset diesel emissions, but the net effect is that it strangles domestic producers who not only have higher input costs to consider, but also a larger regulatory burden by the same entities that are enabling the foreign competition in the first place.

The Short Version

If you’re still reading and haven’t fallen asleep, or just skipped to this section to find out what all the above ranting really means, it means the biodiesel industry appears to be coming into a turnaround phase rather soon.   With higher than expected soybean oil surpluses in 2015, expected increases in demand from the RFS program finalizing incremental increases, and the biodiesel tax credit looming, biodiesel should expect a boom for at least 2016, and probably beyond.


Source: FDD and OPIS.

Source: FDD and OPIS.


Obama Administration – Biodiesel Friend or Foe?

Reuters: Pelosi to Obama: boost U.S. biofuels program ahead of Paris talks

NEW YORK | By Chris Prentice

U.S. House Democratic Leader Nancy Pelosi and three other lawmakers are pressing President Barack Obama not to back-peddle on the country’s biofuels program just days ahead of global climate change talks in Paris.

The Democratic Representatives – Pelosi from California, Steny Hoyer from Maryland, Collin Peterson from Minnesota, and David Loebsack from Iowa – asked the administration to rethink a proposal for the controversial Renewable Fuel Standard and to keep the program “robust” in a letter dated Nov. 18.

The push comes just over a week ahead of a Nov. 30 deadline for the U.S. Environmental Protection Agency to finalize mandates for renewable fuels use through 2016. That date coincides with the start of the Paris discussions.

The EPA in May proposed requirements for the amount of biofuels blended into the country’s transportation fuel stream that were below requirements set by Congress in 2007.

“We hope you will keep in mind the need to reduce carbon pollution, and not expand it in the transportation sector in the days leading up to the President’s historic efforts” in Paris, they said in a letter to Brian Deese, an assistant to the president and senior adviser.

EPA reduced the mandates around the principle of the “blend wall,” which oil groups say is the saturation point for ethanol use in the fuel stream without greater infrastructure change.

The plan drew ire from both biofuels groups and oil companies alike, and both groups have been ratcheting up their lobbying and advertising spending ahead of the EPA’s deadline to finalize the rule.

The lawmakers, who met with Deese on Oct. 29, also emphasized the importance of correcting errors in the mandates related to “more accurately reflect” gasoline demand projections and biofuels exports.

Politico: Biofuels Group Touts GHG Analysis

Just days before EPA is slated to release its latest Renewable Fuel Standard mandate, the Renewable Fuels Association is touting an analysis concluding that the program has saved over 354 million metric tons of carbon dioxide so far. It’s the latest salvo in the environmental war in which the RFS’s critics argue that corn ethanol, which makes up the bulk of RFS biofuel requirements, has little climate benefit over petroleum fuels. The report, from the consulting firm Life Cycle Associates, said the reductions were higher than expected despite the slow growth of cellulosic because corn ethanol technology improved and EPA underestimated baseline petroleum emissions.

Center for Regulatory Solutions begs to differ

The anti-RFS non-profit will release a report looking at the greenhouse gas impact of the RFS on Illinois today, the fifth in a series by the nonprofit. The report says corn ethanol production and consumption added 4.1 million tonnes of CO2 emissions in Illinois between 2005 to 2014.


Senate to Propose Biodiesel Tax Incentive

From the NBB:

We’re happy to report that the Senate Finance Committee today unveiled a bipartisan “tax extenders” package that includes the biodiesel tax incentive. The committee is slated to take up the package next week.

This marks welcome progress for one of NBB’s top priorities and is an important step toward winning reinstatement of the tax incentive. The proposal, released by committee Chairman Orrin Hatch, R-Utah, and Ranking Member Ron Wyden, D-Ore., calls for a two-year reinstatement covering 2015 and 2016. The committee has scheduled a markup for the bill, which contains 52 tax incentives and is titled, “An Original Bill to Extend Certain Expired Tax Provisions”, on Tuesday, July 21.

The committee has been working on the bill in a bipartisan fashion on the bill for weeks, so we anticipate that it will have broad support in committee. However, we urge those of you with senators on the committee to contact them today and urge them to support the biodiesel incentive. Makes sure they know it is an important economic policy for their home state. To find a list of senators on the committee, click here on the committee’s website.

More information on the bill can be found here. A copy of the initial Chairman’s Mark of the bill can be found here. A revenue table for the tax extenders bill can be found here. A summary of the package can be found here.

As you know, this is the beginning of what has been a long process in past years. However, the Senate bill is a significant step forward, and it will serve as the first draft as House and Senate leaders continue negotiating how to proceed with expired tax incentives. It was critical that biodiesel was included in this proposal.

We will send another update next week after the committee markup. Meanwhile, if you have any questions, please don’t hesitate to contact our Washington office at 202-737-8801.



Enzymatic Biodiesel

We have been benchtop testing with enzymatic biodiesel, evaluating it’s performance with different feedstocks and mixture ratios to see what works best.  So far, I’m impressed with the results and it appears to be far easier to use than I originally understood.

We have begun investigating what the upfit costs would be to scale up for production, but the ROI looks promising.   Not only would we be able to use a wider range of feedstocks, but the pre-treatment time is cut dramatically, input chemicals are cut dramatically, and our production yields look like they might double.  All very promising.

I’ve been down this road before, skipping down what looks to be a yellow brick road and then have a bunch of flying monkeys swoop down and steal my favorite dog.   So, we proceed cautiously, but overall we are excited about the prospect of using a new technology that could potentially increase yields and profit.


EPA Releases RFS Volumes for Biodiesel (finally)

Biodiesel back on track for increased demand in upcoming years.  This is good news, and long overdue…

From the NBB:

The EPA today released its long-awaited proposal to establish volumes under the Renewable Fuel Standard (RFS). While the proposal is not perfect, we are pleased to report that it calls for steady growth in Biomass-based Diesel through 2017 and is a dramatic improvement from the EPA’s initial draft in November 2013. In fact, while the initial proposal would have held biodiesel flat at the 2013 standard of 1.28 billion gallons through 2015, today’s proposal calls for an increase of more than 600 million gallons between 2013 and 2017.

While we will continue pressing for stronger growth during the coming weeks, this represents a significant turnaround that should pave the way for healthy biodiesel markets in the coming years and also sets a precedent for further RFS growth in the future. The proposal, which is subject to public comment and change until finalized later this year, would establish the following volumes for Biomass-based Diesel:

2014 – 1.63 BG
2015 – 1.7 BG
2016 – 1.8 BG
2017 – 1.9 BG

Additionally, it includes the following growth for the overall Advanced Biofuel category, which offers further opportunity for biodiesel growth above and beyond the Biomass-based Diesel standards:

2014 – 2.68 BG
2015 – 2.9 BG
2016 – 3.4 BG

The EPA says it will finalize the proposal by Nov. 30.

We know the delays and uncertainty surrounding this RFS rule over the past two years have been incredibly damaging to our industry and have created significant hardships at your businesses. But the improvements in this proposal are a testament to the impact that we as an organized and unified industry can have in Washington. Thank you to all who participated in our advocacy efforts. This wouldn’t have happened without your help, and we will be calling on you to engage even more in the coming weeks.



Best Regards,

Joe Jobe
National Biodiesel Board



Corn prices have dropped, but has your food costs? Ask Chuck Grassley

2015-05-20 02:24:11 EDT via OPIS
***Sen. Grassley Rails against RFS Repeal Opinion Piece

Sen. Chuck Grassley (R-Iowa) took to the Senate floor earlier today to rail
against a Wall Street Journal opinion piece written last week by the National
Chicken Council and the National Council of Chain Restaurants, calling on
Congress to repeal the Renewable Fuel Standard (RFS2).

In the opinion piece last week, the two groups described the RFS as a provision
“that stymies small businesses, hurts the environment and increases food
prices.” OPIS reported on the opinion piece on May 15.

“Once again, chain restaurants and chicken producers are teaming up to smear
homegrown biofuels producers at the expense of energy independence and cleaner
air,” Grassley said on the Senate floor, noting that “every couple of years,
food producers or grocery manufacturers team up with big oil to try to undermine
the extremely successful Renewable Fuel Standard.”

“I’m going to take this opportunity to do a simple fact check of some of the
most egregious claims. First, they claim that since 2005, when the RFS was first
adopted, costs of vital food commodities, including corn, grains and oilseeds,
poultry, meat, eggs and dairy have risen dramatically. This is pure myth,”
Grassley said. “The fact is consumer food prices have increased by an annual
average of 2.68% since 2005. In contrast, food prices increased by an average of
3.47% in the 25 years leading up to passage of the RFS,” he noted.

“Second, they claim that as a result of the RFS, corn is being ‘diverted’ from
livestock feed to ethanol. Again, this claim is false,” Grassley continued.
“Corn used for ethanol has come from the significant increases in corn
production since 2005….And one-third of the corn used for ethanol production is
returned to the market as animal feed. The amount of corn and corn co-products
available for feed use is larger today than any time in history. So, it’s hardly
being diverted,” he said.

“Finally, they claim the increases in feed costs have affected the American
production of beef, pork and chicken. They state that production had increased
consistently over the past 30 years, but has now leveled off due to the higher
cost of feed. Again, this is nowhere near reality,” Grassley said. The reality
is USDA is projecting red meat and poultry production of 95.2 billion pounds
this year, up 10% from 2005. … Just a few years ago, when corn prices had
peaked at more than $7.50 a bushel, grocers, food producers and restaurants were
claiming that food inflation would approach 10% because of the RFS. They warned
that they’d be forced to pass those higher costs on to consumers immediately,”
he said.

“Well, with corn at $3.50 a bushel today, have consumers seen a dramatic
reduction in retail food prices? … Corn prices have come down by more than
half in the past two-and-a-half years, so why are food producers holding prices
steady or increasing them?” Grassley asked.

“The fact is domestic renewable fuel producers are feeding and fueling the
world. … The [RFS] policy is working. I intend to defend all attacks against
this successful program whether they come from big oil, the EPA, big food or
others,” Grassley added.

Neither food group responded to Grassley’s remarks by presstime.

Clean Burn Ethanol Plant Closed Before it Opened

Autopsy of the NC Biofuels Center

Almost a year old now,  I recently ran across an article that talked about the GOP’s funding retraction for the NC Biofuels Center and how it was politically motivated.   The article can be read in full at  I don’t know much about, but the article reads very bent towards the political left, and didn’t really have any weigh in from the Republicans or any real mention of mitigating factors that may have contributed to the Center’s demise.

From a North Carolina biodiesel producer’s perspective, I have a few thoughts on the matter.   I met with the leadership of the Biofuels Center many times.  They came and visited my plant in 2011.   There are 5 biodiesel plants in North Carolina, and that year was the year we became the largest producer in the state.  I liked them instantly as they were very respectful and friendly.   They were not, however, very well educated on biodiesel or how it is produced.  I expected more I guess, being they were from the “Biofuels Center”.   I got multiple questions about fermentation, distillation, or similar ethanol type biofuel questions which had no application in my plant.  They were eager to learn, but I felt they should have come more prepared (and apparently I wasn’t the first biodiesel plant they had visited that week).

And that summed up in a nutshell the focus of the Biofuels Center (BC):  They were focused almost entirely on ethanol and ethanol based crop research.  The goal set by North Carolina was lofty:  “By 2017, 10 percent of liquid fuels sold in North Carolina will come from biofuels grown and produced within the State.”   Almost none of that, apparently, was envisioned as coming from the five biodiesel plants that already existed in North Carolina.   Logistically that made some sense, in that they needed at least a few very large biofuels plants in NC to be able to meet such a lofty goal as was set.  I know at least 3 of the 5 biodiesel plants (including TBI) would have happily accepted ANY incentives to expand our plants to meet the goal.  But the BC wanted ethanol.

Triangle Biofuels never got any financial support from the Biofuels Center, even though we contacted them and applied several times.  Where they did provide financial support, grants, or research assistance is well documented, but as far as I know there were no major allocation of funds ($250,000 to Blue Ridge Biofuels is the largest and only real grant I’m aware of) provided to any of the existing biodiesel plants for expansion to help meet the 10% goal set by the State.   To be fair, the $250,000 award to Blue Ridge is a sizable award by most biodiesel plant measures, but comparatively it was too small.  Much of the awards went to municipalities or research programs for university programs.   Their failures are also well documented, such as “Clean Burn” (see featured image above) in Raeford, NC, which received millions in funding and incentives but went bankrupt before it ever produced any ethanol.  Needless to say, it’s 2015 and we will come nowhere close to meeting that goal in 2017.  Most likely, it never really had a chance to begin with.

Lyle Estill of Piedmont Biofuels said this in the article:  “Looking back on the center, Estill said that its leaders would sometimes ‘impose petroleum thinking on the biofuels endeavor.’ In other words, the center aimed for big projects that require massive quantities of feedstock.”  Lyle and I often don’t see eye to eye, but I respect his expertise and passion for biodiesel as a fuel, and his perspective on this issue is dead on in my opinion.  He too wanted to see the smaller plants receive funding to help them grow, and possibly spark additional plants into production.  That, of course, never happened.

The idea of the Biofuels Center was a fantastic one; it was noble, and it was timely.  The people that worked there were ambitious, talented, and passionate.  Their execution however, was flawed and misguided.

Factor in the budget constraints that most states were operating under, the lack of any significant substantive accomplishments by the Biofuels Center towards the goal set for 2017, the low ROI on funds allocated to the center, and it isn’t difficult to understand the Legislature’s decision to stop funding the center.


NC Motor Fuel Tax for Biodiesel Reduced to .36/gallon!

Effective April 1st, 2015 through December 31, 2015, the North Carolina motor fuel tax rate will decrease from 37.5 cents per gallon to 36 cents per gallon.  This also applies to biodiesel when used as a motor fuel for highway use.

The inspection tax remains at .0025 cents per gallon.

ASTM Fuel Oil Standard Revised to Accommodate B6-B20 Blends

From OPIS:

ASTM International announced today new performance specifications for fuel oils(D396) that will accommodate blends of 6% to 20% biodiesel in conventional fuels.

The revised standard, to be known as D396-15a, will go into effect as soon as it is published, which ASTM said would be “soon.”

The blend is branded Bioheat (R) fuel. The fuel oils covered by D396 are used in home heating and hot water applications, as well as industrial boilers and burners.

The existing No. 1 and No. 2 grades in ASTM D396 already cover 5% biodiesel or less.

“The oilheat industry is reinventing itself as a 21st-Century fuel by moving to higher blends of low-carbon biodiesel and ultra-low sulfur levels across the board,” said John Huber, president of the National Oilheat Research Alliance (NORA), in a statement provided by the National Biodiesel Board (NBB). NBB and NORA have worked together on Bioheat (R) fuel certification, testing and user education.

The new B6-B20 grade is a blend of all the parameters contained in the existing No. 1 and No. 2 oilheat grades, but adds parameters for stability and allows a slightly higher distillation temperature for the blends. The changes are the same as those for B6-B20 in on-and-off-road diesel fuel passed by ASTM in 2008.

“The data set behind these changes is one of the most extensive I’ve seen in more than 20 years at ASTM,” said Steve Howell of M4 Consulting, an ASTM Fellow who chairs the ASTM Biodiesel Task Force. “Having an official standard for higher biodiesel blends in heating oil will help foster consumer confidence, and give blenders and distributors a needed tool to incorporate more low carbon, ultra-low sulfur biodiesel into heating oil.”

Research will continue to support official specifications for higher- concentration blends of biodiesel in heating oil, all the way to B100, according to NBB.

“Brookhaven National Laboratory surveys of customers already using biodiesel blends not only showed similar or better experience than with traditional fuel oil, they also showed many already use B20 or higher blends with great success,”
Howell said.

The official vote to change the standard took place at the December 2014 ASTM meeting.

–Kevin Adler, OPIS  (




Biodiesel Tax Credit for 2015?

I just received a letter in the mail today from Senator Richard Burr regarding a letter I sent him about the biodiesel tax credit some months ago.  In it, I stated that the biodiesel tax credit is actually HARMFUL the way it is being currently implemented.  That is, letting it lapse for a whole year and then reinstating it retroactively, as Congress has now done three times.

He agreed that Congress should provide businesses more certainty than the current year-to-year extensions we are currently experiencing, but claimed that attempts at longer extensions (like the 3 to 5 year tax credit I proposed) were thwarted by a veto threat from the President.

This is confusing for us in the biodiesel industry, as the President has promised that the renewable energy sector has his full support.   That, however, does not appear to be the case.  Especially in light of the political games being played with the EPA and the RFS program, which are under the control of the President.

So, at best we can appear to hope for yet again another kicking of the can down the road, and another 1 year biodiesel tax credit for 2015.  Hopefully before we see January of 2016…

You can view the Senator Burr Letter here

To add insult to injury, I received a letter from my insurance carrier showing that the “Terrorism Risk Insurance Act” was set to expire on December 31, 2014 but was somehow able to be renewed until December 31, 2020!!   It just goes to show you what a powerful lobby can do for your industry.    Here’s the letter from the insurance carrier