Biodiesel Group Blames 2014 Market Slump on Policy Uncertainty

The U.S. biodiesel market suffered a small downturn in 2014 compared to a record year in 2013, and the National Biodiesel Board (NBB) is blaming policy uncertainty for the slump.

Environmental Protection Agency (EPA) data shows that total U.S. biodiesel consumption fell to 1.75 billion gallons last year, down slightly from nearly 1.8 billion gallons in 2013.

The NBB, an industry trade association, says Washington politics destabilized the sector and caused many plants to shut down or reduce production. Specifically, the group says last year's decrease came as the Obama administration failed to finalize biodiesel volumes under the Renewable Fuel Standard (RFS) and Congress allowed the $1.00/gallon biodiesel tax incentive to lapse at the beginning of 2014.

“These numbers reflect the consequences of policy inaction,” says Joe Jobe, CEO of the NBB. “The drop in production represents lost jobs and economic activity.”

In November 2013, the EPA initially proposed to hold the 2014 RFS biodiesel volume at 1.28 billion gallons. The NBB says the federal agency subsequently withheld a final rule and has still not established 2014 volumes, even as it has signaled that it will improve the original proposal.

“The numbers would have been even lower had the EPA not signaled throughout the year that it will strengthen the RFS proposal and finalize it promptly,” says Jobe. “But companies can operate on faith for only so long.”

Furthermore, Congress once again allowed the biodiesel tax incentive to expire on Jan. 1. It marks the fourth time in six years the incentive has been allowed to lapse. Congress reinstated the incentive late last year, covering 2014 but not 2015.

“We are calling on the Obama administration to get things back on track immediately by finalizing biodiesel RFS volumes that pave the way for stable growth in the coming years,” explains Jobe. “Additionally, we are urging Congress to reinstate the biodiesel tax incentive now instead of procrastinating until the final days of the session.”

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