NBB doubles down on RFS, tax credit while leveraging new opportunities in Democratic Congress

On the same day President Joe Biden held his first press conference after being in office for 64 days, the National Biodiesel Board also held a press event to discuss its latest policy priorities and the future of biodiesel and renewable diesel in the new political landscape. NBB just concluded its March board meeting before the presser.

Donnell Rehagen, NBB CEO, discussed the industry vision laid out in January 2020 to grow the U.S. biodiesel and renewable diesel industry to 6 billion gallons by 2030 and 15 billion gallons by 2050. He said the strong markets that the board based its vision on are even stronger now. Exceptional growth in state carbon-reduction goals, and federal policies—the Renewable Fuel Standard and the $1 per gallon blenders tax credit—continue to be solid foundations for the U.S. biobased diesel industry, Rehagen said.

“I think there’s no doubt that as we grow, [we will face] challenges across the industry,” Rehagen said. “But I don’t see feedstock as a challenge at this moment.”

He added that the 6-billion-gallon figure wasn’t just picked out of the air. “This was determined from a market-demand standpoint, and a feedstock-supply standpoint,” Rehagen said. “It would be malpractice on our part to suggest, and build hope that we could grow to a level that we’re not capable of … I don’t see a [feedstock] challenge with getting to 6 billion gallons by 2030. As renewable diesel production comes online early in this decade, there may be moments in time during which feedstock challenges are present. But I’m a firm believer that the market will respond.”

When NBB models feedstock supply, it looks at global availability, but Rehagen noted that it is imperative to find ways to incentivize domestic biobased diesel production with domestic feedstock supplies.

Data suggests, however, that much of the domestic material that is considered low-carbon feedstock, particularly waste greases such as used cooking oil and yellow grease, is being exported out of the U.S. For instance, a great deal of such materials is shipped from the U.S. to Singapore by Neste Corp., where it converts the low-carbon feedstock into renewable diesel and sustainable aviation fuel, and then ships it back to West Coast carbon markets such as California with its insatiable Low Carbon Fuel Standard.

While many waste feedstocks are going overseas, soybean farmers and soybean oil—the byproduct of crushing soybeans for protein meal—built the U.S. biodiesel industry and, especially in 2020, sustain it. Just recently, several senators sent USDA Secretary Tom Vilsack a letter, asking him to update the lifecycle assessment on soy biodiesel by the end of this year.

“From the ag side, this industry is so, so important to soybean farmers,” Rehagen said, adding that biodiesel creates a 13 percent value-add for each bushel of soybeans. “Think of this in context of today’s soybean prices.”

And while biodiesel is a solution for the hot topic of carbon reduction today, Rehagen said he is positive no one saw that opportunity 30 years ago when the industry was born.

“The value at the farmgate, all the way up to creating jobs for rural economies that need it, and now removing carbon—I’m proud of where this industry is,” he said.

NBB plans to encourage utilization of the existing RFS—which is not set to expire in 2022, as many people falsely claim—to drive the support for advanced biofuels that Congress originally intended. Furthermore, NBB views the installation of a new biofuel-friendly administrator for the U.S. EPA, Michael Regan, as a positive step in the right direction, particularly as EPA will have more discretion in the direction of a post-2022 RFS program.

NBB continues to have conversations with Regan and his team, advising the new administrator that biodiesel has the potential to grow and remove more carbon from various sectors of the economy. What the industry needs, and what Regan and EPA can provide, is a long-term, sustainable, predictable path to grow under RFS.

RFS, and the growth trajectory it provides low-carbon biodiesel and renewable diesel, is a “statute on the books to decarbonize the transportation sector,” Rehagen said. “A fleet can choose biodiesel today and change its carbon footprint immediately. There’s no other option like that.”

Kurt Kovarik, NBB vice president of federal affairs, said, “This is a great time for the biodiesel industry right now, given the [Biden] administration’s focus on building back better. I say build back better cleaner. Support for domestic, renewable, clean-burning fuel is in high demand.” Rehagen added that while COVID-19 has “taken a little chink out of our armor,” the biodiesel and renewable industry has held strong.

In its talks with House, Senate and staff members on the Hill, NBB is optimistic that policymakers recognize the value biodiesel brings to the table in terms of carbon reduction and cleaner air—just two of myriad benefits biodiesel and renewable diesel provide.

While NBB is doubling down on its more traditional, effective policy approaches utilized to build and grow the biobased diesel industry—the RFS and tax credit—Kovarik said the organization is looking above and beyond what Congress has provided the sector in the past.

All committees on Capitol Hill—clean energy, climate, transportation, energy and commerce, ways and means, ag committees—each of them is an opportunity for biodiesel to demonstrate what it brings to the conversation. Infrastructure investments, R&D on cover crops for more feedstock to grow and provide carbon capture, these are “perfect wins for the biodiesel industry,” Kovarik said. “We’re not coming in with a wish list, but rather we’re talking with all committees and agencies, telling our story—what biodiesel brings to the table.”

One item on the non-wish list, according to Kovarik, is codifying what USDA provided under the Trump administration in terms of USDA money to build out infrastructure under the Higher Blends Infrastructure Investment Program. “We advocated for that, and biodiesel gets a [small] portion of that [funding], but our infrastructure needs are different than ethanol’s,” he said. “We advocated for bulk transport infrastructure—pipelines, terminals, bulk storage. There is legislation in the Senate that would authorize funding for that program in the infrastructure bill.”

With Congress now controlled by a majority of Democrats whose focus is on decarbonization of the economy, Kovarik said the options are many. The existing tax code can be further leveraged to promote low-carbon fuels, and biodiesel can be part of a more comprehensive plan focused on greening the economy and cleaning the air.

He made it clear, however obvious it may be, that NBB does not advocate for any phase-out of the $1 per gallon blenders tax credit, as some bills propose.