Only 23 miles of State Highway 121 separates Fort Worth, where the National Biodiesel Board held its annual conference in January, and Grapevine, where the National Ethanol Conference set up shop last week. But the two industries couldn’t be further apart when it comes to their perspectives for the immediate future.
Officials at the ethanol conference didn’t seem fazed at the uncertainty posed by the delay in the EPA’s Renewable Fuel Standard. Indeed, Bob Dinneen, president of the Renewable Fuels Association, said the EPA’s inaction has prompted the industry to push exports as the next frontier of expansion.
“Without question, exports have offered the most immediate source of demand growth in recent years and there is good reason to believe that demand can be expanded quickly,” he said.
But for the US biodiesel industry, the tone was quite different during its conference. National Biodiesel Board chairman Joe Jobe made no bones about the fact that getting the RFS back on track was instrumental to the future of the industry, and he took RFS critics to task for spreading what he called “sensational, tabloid” misinformation.
“2015 has to be the year we get back to the future of this program and out of the uncertainty of the past,” Jobe told conference attendees.
Jobe has cause to be worried about the uncertainty caused by the RFS delay. Data released by the EPA last week showed that biodiesel production plummeted 57% in January 2015 compared to December 2014, from 212 million gallons to 90 million gallons. Sources have said many plants have shut down or are operating at dramatically reduced capacity.
Meanwhile, US ethanol production only dropped 7.45% in that timeframe.
With production nearly reaching 1 million b/d, the domestic ethanol industry dwarfs its sister biodiesel in terms of production and demand.
And while the US ethanol industry has its eyes set on increasing exports, domestic biodiesel producers are wringing their hands over the EPA’s decision to “fast-track” Argentinian biodiesel imports.
The next few months will be interesting to watch for the US biofuels complex. Physical trading in the spot market for US biodiesel is essentially dead due to the RFS delay. The EPA has promised at each conference to release the blending mandates in the spring. If the agency continues to delay, as it has for the last year or so, expect more and more biodiesel producers to shut down or declare bankruptcy. Meanwhile, US ethanol producers could be even more aggressive in their export plans.
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