Biodiesel

ASA supports maintaining the integrity of the Renewable Fuel Standard (RFS) to ensure continued investment in the American biofuels industry.

Biodiesel is a key market for U.S. soybean oil. A significant amount of the soy oil that traditionally was used in food products was displaced after the Food and Drug Administration (FDA) identified partial hydrogenation as a cause of trans fats. Without biodiesel as an alternative market, surplus soy oil would have a major negative impact on soybean prices. ASA recently supported a 5-year extension of the biodiesel tax credit. With that tax credit now in place, it is important that we seek other means to keep biodiesel competitive in U.S. fuel markets.

 

Photo Courtesy of USB

ASA specifically supports:

  • Improvements to the Renewable Fuel Standard (RFS), including increasing annual volumes for biodiesel and advanced biofuels and securing implementation of a mechanism for EPA to account for actual RFS volumes waived through Small Refinery Exemptions (SREs).
  • Continued funding for the Biodiesel Fuel Education Program in annual appropriations legislation.
  • Research and development of technologies to produce additional renewable energy products from soybean sources.

Issues Background

The U.S. Department of Commerce (DoC) and International Trade Commission (ITC) ruled in favor of the anti-dumping (AD) and countervailing duty (CVD) cases filed by the U.S. biodiesel industry in response to unfairly subsidized biodiesel imports from Argentina and Indonesia. The AD and CVD imposed by the DoC and ITC have resulted in significant reductions of imports and increased opportunities for domestic biodiesel production. However, in response to a request for reconsideration submitted by the government of Argentina citing, “changed circumstances,” the U.S. Department of Commerce has proposed reducing the countervailing duties.

Under the preliminary decision, countervailing duties on unfairly subsidized biodiesel imports from Argentina would be reduced significantly, while antidumping rates would remain the same. If finalized, the existing countervailing duty rates would be reduced from their current average of 72% to 10%. The antidumping duty rates currently in effect, which average 75%, would remain and would be applied in addition to the counter-vailing duty rates, resulting in a total average rate of 85%.

ASA farmer-leaders participated in several meetings with the Commerce Department, including Secretary Wilbur Ross, to reiterate the impact of the subsidized imports on U.S. biodiesel producers and soybean farmers. ASA, along with the National Biodiesel Board (NBB)-led Fair Trade Coalition, emphasized that there is no material change in the export tax rate for soybeans or its depressing effect on Argentine soybean prices relative to world market prices.

ASA urges the Department of Commerce to maintain the anti-dumping and countervailing duty rates on unfairly subsidized biodiesel imports from Argentina and Indonesia.

ASA supports funding the Biodiesel Fuel Education Program alongside the National Biodiesel Board. The Biodiesel Fuel Education Program was established in the 2002 Farm Bill with the goal of stimulating consumption and investment in biodiesel and renewable diesel. Information and outreach activities funded through the Biodiesel Fuel Education Program have raised awareness of the benefits of biodiesel fuel use and complemented incentives Congress provided in 2005 when it enacted the Renewable Fuel Standard and biodiesel tax incentive. The 2018 Farm Bill shifted the Biodiesel Fuel Education Program from mandatory funding, and the program is now subject to annual appropriations. ASA supports funding this program at its authorized $2 million level.

Increasing the RFS volume requirements for biomass-based diesel helps farmers and rural communities by providing a market for surplus soy oil while also creating jobs, diversifying our fuel supply, and reducing our greenhouse gas emissions. While soybean producers face continued uncertainty in export markets, it is important that our domestic markets can succeed. The RFS can create stability for biodiesel producers and blenders through annual renewable volume obligations.

The most recent threat to the RFS that remains uncertain is the retroactive filing of Small Refinery Exemption (SRE) waiver petitions—known as “gap filings”—to the EPA over the past year. While some SREs are approved during the current calendar year, a January 2020 ruling from the U.S. Court of Appeals for the 10th Circuit ruled that the EPA had limited statutory authority under the RFS and could not issue SREs retroactively.

ASA farmer leaders engaged directly with Administrator Wheeler on this issue and welcomed the Administrator’s September 14, 2020 denial of 54 “gap filing” petitions for compliance years 2011-2018.

There are still 14 outstanding “gap filings” that were not included in this ruling, and EPA is yet to rule on the 31 filed petitions for compliance years 2019-2020. ASA will continue to oppose any waiver request with a negative economic impact to agriculture.

In December, Congress provided a 5-year extension of the biodiesel tax incentive. The incentive expired at the end of 2017, so the extension applies retroactively to 2018 and 2019 and forward through 2022.

When the tax credit is in place at the beginning of the year, the biodiesel industry grows with confidence. For example, in 2013 and 2016 – the last two times the industry could look forward to the tax credit – U.S. biodiesel production grew by 400 million gallons and demand increased by 800 million gallons.

Every 100-million-gallon increase in production supports 3,200 U.S. jobs and $780 million in economic opportunity, according to LMC International (2019). Biodiesel production also adds 13% to the value of every bushel of soybeans, according to INTL FCStone (2019) – an average of $1.10 in 2019.