CRUEL
SUMMER
A series of unfortunate events this summer―all caused by U.S. government action or inaction―has led to a precarious situation in the biodiesel sector, but there may be a silver lining
BY RON KOTRBA severe antidumping duties in 2018. The measures halted imports of what the trade coalition effectively argued was unfairly traded biodiesel. The trade measures, while technically sound, were a Gebolys political no-brainer for the then-newly elected U.S. president, Donald Trump, who campaigned on a platform of “Make America Great Again” by rebalancing unfair trade relationships, incentivizing domestic manufacturing, upholding the RFS, and elevating farmers and rural America—his political base. When the commerce department announced this July that it had reached a preliminary determination to significantly reduce the CVDs against Argentina after an unprecedented “changed circumstances review” (CCR) so shortly after the tariffs went into effect, it left U.S. biodiesel stakeholders scratching their heads in utter wonder. This was only the beginning, however, as just two days later, the EPA released its 2021 RVO proposal for biomass-based diesel. Amidst significant demand destruction that the agency had caused under the Trump administration’s relatively short tenure, the EPA proposed to stall the 2021 biomass-based diesel RVO at 2.43 billion gallons, the same as the RVO for 2020 set in late 2018. Under this scenario of rampant SREs being granted, a stalled RVO would be, in effect, a severe cut to the standard considering EPA has yet to account for its voluminous SREs granted hitherto. The U.S. ethanol and biodiesel industries
had already been dealing with an inordinate number of SREs granted under the Trump administration, which were the subject of numerous lawsuits, complaints, calls for investigations and legislative action for quite some time. The questionable process in which the SREs are granted, the lack of estimations of SREs to be granted in RVO proposals, and the agency’s thumbing its proverbial nose at the idea of reallocating waived gallonage had all been taking its toll on biofuel producers. When it seemed like things couldn’t get any worse, and as soybean farmers endured a long and market-destroying trade war with China that eroded the U.S. soybean complex’s No. 1 relationship, on Aug. 9, the EPA approved its largest and most destructive set of SREs—31 in one fell swoop. A week after the Aug. 9 SRE announcement, World Energy—one of the largest biodiesel producers in North America—announced it was halting production at three of its biodiesel plants in Georgia, Mississippi and Pennsylvania. “If anyone was still living with the delusion that this administration supported us, then this round of SREs was an unignorable wake-up call,” Gene Gebolys, founder and CEO of World Energy, tells Biodiesel Magazine. “The president made promises to uphold the RFS and then he made that decision to eviscerate it. We’ll get through this, but I am not sure the administration’s credibility will.” Tax Credit In November 2018, U.S. voters elected around 90 new members to the House of Representatives—the “freshman class”—installing in January the most diverse body in the history of the chamber. As a result, Democrats regained control of the House, solidifying a more youthful, progressive contingent to the
party whose No. 1 goal, ostensibly, is to act on climate change. A month after being sworn in, Rep. Alexandria Ocasio-Cortez, D-New York, introduced “The Green New Deal,” a framework to slash carbon emissions and avert what many Democrats label an “existential crisis.” The proposal has been characterized as ambitious and bold, and it could revolutionize the U.S. economy while upending the status quo in major sectors of power generation, transportation, construction and more. Republicans, who control the Senate, are not biting. With the progressive, often urban Democrats in a political stalemate with the more rural, conservative Republicans, there should be overwhelming bipartisan support for the blenders tax credit. Yet it has remained lapsed for 20-plus months, despite both the House and Senate having introduced virtually identical legislation to reinstate the incentive. “It expired on the Trump administration’s watch when we had a Republican House and Senate,” says Finkenauer, one of the freshmen class that makes up more than a fifth of the House. “I’ve made it my mission to reinstate it, and I’m working across the aisle for bipartisan and bicameral support.” In April, Finkenauer introduced “The Biodiesel Tax Credit Extension Act,” a two-year extension retroactive to Jan. 1, 2018, through Dec. 31, 2019. “Grassley has a matching bill in the Senate,” she says. “It doesn’t matter what the party affiliation is, all should be supportive of this and I’m working really hard on getting this done.” She says the House ways and means committee is paying attention too, as they marked up a package that includes a three-year extension of the credit. “The time to act is now,” she says. “The uncertainty has a direct impact on the folks and communities in my district. Rural Iowa is being www.BiodieselMagazine.com
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