Finish the work of building a renewable fuels industry

The men and women who took seriously the government’s desire to develop a renewable fuels industry have made great progress in creating billions of gallons of biodiesel production capacity.  Their success should be a cause for celebration; it is good for the country and should continue to be encouraged. Biodiesel production extends the U.S. fuel supply, substantially reduces carbon emissions, and supports family farmers.

Despite their success, those men and women are too often meeting roadblocks in the same federal programs meant to encourage them in the first place.

Producers of biodiesel — which can reduce carbon emissions from over-the-road trucking by up to 80 percent — continue to watch policymakers in Congress and the White House drag their feet on key policies.

Renewable fuels policy is a winner in every way. Not only does it hold the key to substantially reduced carbon emissions, it also is a significant boost to family farmers who benefit when bountiful food, fiber and fuel are produced from our nation’s fertile soil. Biodiesel production adds approximately 63 cents of value to every bushel of soybeans.

Farmers and biodiesel producers have been promised over and over that Congress would extend the tax credit for biodiesel production. But it has been postponed time and time again. As a result, some producers have cut back on production or closed facilities and laid off workers.  Without the tax credit, many biodiesel producers face major financial difficulty. Congress needs to get the tax credit done — and soon.  

There is strong, bipartisan support for extending the biodiesel tax credit. A bill introduced in the House of Representatives by Rep. Abby Finkenauer (D-Iowa) in April to quickly extend the biodiesel tax credit through the end of the year has 57 co-sponsors. They include representatives from California to Connecticut, with a balance of Democrats and Republicans.

Rep. Richard Neal (D-Mass.), chairman of the tax-writing Ways and Means Committee and a renewable fuels supporter, also is working to get the tax credit extended. In June, his committee passed legislation that would extend the incentive through 2020, providing one year of forward-looking certainty for the industry. Chairman Neal recognizes that long-term certainty is the best policy for renewable fuels growth. No one can rely on expected financial incentives that are not consistently delivered. Instead of on-again, off-again policy, why not treat biodiesel producers the same as oil producers, who have had permanent tax credits for more than a century? 

The new majority in the U.S. House needs to work with Chairman Neal to get this done. Some things are hard for the Congress to do, but this isn’t one of them. It’s long past the time to get this right and to get it done.

More needs to be done at the other end of Pennsylvania Avenue as well. President Trump recently pushed the Environmental Protection Agency (EPA) to complete a rule-making that allows E-15 to be used throughout the year. That is a good thing to have done and has been a long-sought goal for ethanol producers. But it does not help biodiesel or other advanced biofuels. 

But even as they do that, the White House and the EPA are undercutting advanced biofuels such as biodiesel by cutting back the Renewable Fuel Standard (RFS) program and allowing secret hardship waivers to so-called small refiners. They have to know that small refinery exemptions are stunting the growth of the biodiesel industry. There is no justification for the type and amount of waivers the EPA and White House have allowed. Some of these waivers have gone to major oil companies in a sleight of hand move by the EPA. Further, the renewable volume obligation just proposed by the EPA provides no growth in the biodiesel industry through 2021. The administration can and should keep its promise to support farmers and to grow this industry.

Those of us who, over a decade ago, enacted legislation to help create a successful, growing renewable fuels industry assumed that the government policies would be maintained to support the growth of the industry.

When the Congress enacts the tax extenders and the White House puts the brakes on the so-called hardship waivers, and begins to set healthy renewable volume obligation (RVO) levels, only then will we see exciting renewable fuels such as biodiesel reach their full production potential.

Byron Dorgan served as a Democratic senator from North Dakota. He is now a senior fellow and co-chair of Arent Fox’s government relations practice and a director of the Energy Project at the Bipartisan Policy Center. Follow him on Twitter @ByronDorgan.