Things Are Looking Up


Originally Published in The Jacobsen on May 8, 2017
California Biodiesel Industry Commentary

In the last few weeks we’ve seen quite a bit of activity affecting the biodiesel industry. Among other things, there was the final ruling in the Poet v CARB lawsuit; the preliminary decision by the International Trade Commission (ITC) to move forward with an investigation into charges of subsidization and dumping of biodiesel imports from Argentina and Indonesia; and twin bipartisan bills introduced by the US Senate and House calling for a 3 year Producers Tax Credit (PTC). All of these indicate a positive trend for biodiesel, not just in California, but across America.

In my last couple of articles I covered the Poet v CARB lawsuit, so I’ll focus more on the NBB anti dumping petition and the PTC.

NBB Files Antidumping & Countervailing Duties Petition
In late March the National Biodiesel Board (NBB) filed an antidumping and countervailing duty petition with the US Department of Commerce and the International Trade Commission (ITC), claiming that biodiesel producers in Argentina and Indonesia are violating trade laws by dumping subsidized fuel on the US market. A subsequent investigation was launched in April, and on May 5 the ITC announced that it would move forward with the matter.

Based on NBB’s review, producers from Argentina and Indonesia are dumping their biodiesel in the US by selling at prices well below their costs. These allegedly illegal trade activities have resulted in a surge in biodiesel imports from these two countries of 464 percent from 2014 to 2016, taking 18.3 percentage points of market share from American producers.

Considering that 90% of Argentina’s biodiesel exports last year went to the US market, these announcements have had a chilling impact on the Argentine industry. A similar effect should be expected in Indonesia. On the other hand, a dramatic reduction in imports from Argentina and Indonesia could boost US production by hundreds of millions of gallons, helping to create tens of millions of domestic jobs.

Bipartisan Congressional PTC Legislation
It may be that one of the first pieces of truly bipartisan legislation to come out of the current congress and hopefully signed by president Trump will be a 3-year extension and modification of the dollar-per-gallon tax credit that lapsed at the end of 2016.

It has long been understood by industry participants that this tax incentive would be far more effective if it were enacted for a longer period of time to allow businesses and the investment community time to plan. 3 years would be a great start.

The US biodiesel industry has also been advocating for a modification from a blenders credit to a domestic producers credit, which would keep US tax dollars supporting only domestic production.

Apparently, senators and representatives have been listening. In the last two weeks both houses of congress introduced bipartisan bills asking for a 3-year extension and modification from a blenders tax credit to a domestic producers tax credit. Both bills also provide an additional 10-cent-per-gallon credit for small US biodiesel producers.

Biofuel imports from Argentina, Indonesia, Singapore, South Korea, India, the EU and others are projected to exceed 1.8 billion gallons in 2016 and 2017 combined. Imported biodiesel often benefits not only from the existing US tax credit, but also from RIN credits (under the federal RFS program), LCFS credits (if imported to California), and additional foreign subsidies, making it extremely difficult for American biodiesel producers to compete. In 2015 alone, the US Treasury spent more than $600 million on tax credits for imported biodiesel and renewable diesel, not to mention the generation and funding of RIN and LCFS credits.

US Remaining in the Paris Climate Agreement is Great for Business
On a separate but related topic, in a letter organized by the Center for Climate and Energy Solutions (C2ES), 16 major companies across the economic spectrum urged President Trump to keep the US in the Paris Agreement on climate change. Among other reasons, these companies cited that continued participation would help them compete in the growing global clean energy markets.

The clean technology sector is estimated to generate three quarters of a trillion dollars to US GDP, and this includes the biofuels and bioenergy sectors. These policies are not only working, they’re creating millions of clean tech jobs across America. The fact that these important companies are this supportive sends a really important signal.

Signatories to the letter are Apple, BHP Billiton, BP, Dupont, General Mills, Google, Intel, Microsoft, National Grid, Novartis Corporation, PG&E, Schneider Electric, Shell, Rio Tinto, Unilever and Walmart.

Things appear to be looking up!