WASHINGTON, May 7, 2014 - Growth in domestic biodiesel demand to satisfy renewable fuels targets and increased access to biodiesel from other countries drove the U.S. to change from a net exporter of biomass-based diesel in 2012 to a net importer last year - by a wide margin, the DOE’s Energy Information Administration (EIA) reports.
Agency analysts say the U.S. imports two varieties of biomass-based diesel fuel - biodiesel and renewable diesel. Last year, total U.S. imports of these two varieties of biomass-based diesel fuel reached 525 million gallons, compared to just 61 million gallons in 2012.
While the volume of imports represents just about 3 percent of the total biomass-based diesel produced in the country, the increase is a trend that is expected to grow, given a sharp drop in biodiesel production thus far in 2014. Government and industry analysts attribute the fall-off to the expiration of a $1-per-gallon blenders’ tax credit at the end of 2013.
EIA says production in January of this year was 70 million gallons, almost half of the record 135 million gallons produced in December 2013.
Last year’s increase in imports of regular biodiesel came primarily from Argentina, particularly in the final four months of the year – a late spike largely attributable to a recent European Union antidumping duty imposed on biodiesel from Argentine producers in late 2013. The EU was previously the destination for most of Argentina’s biodiesel exports.
The EIA says the strongest driver of the resurgence in U.S. biomass-based diesel demand was the increasing federal Renewable Fuel Standard (RFS) target. Both biodiesel and renewable diesel qualify for the biomass-based diesel and advanced biofuel targets, as well as the overall RFS target. With the total RFS target increasing from 15.20 billion gallons in 2012 to 16.55 billion gallons in 2013, the biomass-based diesel and advanced biofuels targets rose from 1 billion gallons to 1.28 billion gallons, and from 2 billion gallons to 2.75 billion gallons, respectively.
Biomass-based diesel fuels have higher energy content compared with ethanol, generating more Renewable Identification Numbers (RINs), which are assigned to batches of biofuel to track production and used as credits by blenders who cannot otherwise meet volume blending requirements set by the RFS. An EPA proposal expected to be finalized in June would hold 2014 biomass-based diesel blending requirements to the same 1.28 billion gallons set in 2013.
Anne Steckel, vice president of federal affairs with the National Biodiesel Board, said that typically, U.S. biodiesel imports and exports have been roughly even, essentially canceling each other out. “But we are concerned about the uptick in imports last year,” she said, particularly as the European Union has set stringent emission standards that have effectively closed its market.
While contending that a variety of factors are at play in the increase in imports, Steckel said EPA should insist on stricter requirements under the RFS, including “meaningful bond requirements and robust quality assurance plans, to ensure that imported fuels truly meet the standards to generate RINs under the program.”
The new gallons from Argentina cited in the EIA are a “threat,” Steckel said. “Argentina [is] incentivizing exports through differential export taxes and with a proposal at the EPA now that would allow a flood of Argentinian soy biodiesel into the U.S. under less stringent RFS sustainability requirements.” She said the NBB is working with the Obama administration on the issue and will continue to analyze the various market forces at work regarding imports.
As for the drop in January production, another industry official said comparing the month with December 2013 totals “is a little misleading, given that production typically ramps up at the end of the year when it looks like the tax incentive will expire.”
However, while the January 2014 production was in line with January 2013, he said that trend of comparable production over the year is not expected to last.
“Unless something changes, we will really start to see the hit in terms of reduced production from the loss of the tax incentive and the weak RFS proposal in the later months,” he said.
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