Federal Foot-Dragging on Clean Fuels

Federal Foot-Dragging on Clean Fuels

In a room full of energy investors on Wall Street, Vice President Joe Biden recently said: "I'm no investment banker, but I wouldn't go long on investments that lead to more carbon pollution. I'd bet on clean energy."

Based on this statement and others like it by the Obama administration -- including comments that Obama made as a presidential candidate at a Pennsylvania biodiesel plant -- investors across the country have taken serious and long-term financial risks to enter the biodiesel industry. There are good reasons to support biodiesel: It is a true advanced biofuel, with the Environmental Protection Agency (EPA) having certified that it reduces greenhouse-gas emissions by up to 86 percent relative to traditional diesel. This is a win for both industry and the environment, and it creates U.S. jobs while lessening our dangerous dependence on petroleum.

But the administration's recent decisions on renewable fuels -- or, in some cases, the lack thereof -- are confounding. Up until 2013, with support from the Obama administration, the biodiesel industry was on a path toward strong, sustainable growth. That was thanks in part to a robust Renewable Fuels Standard (RFS), the federal policy passed under President George W. Bush and supported by Obama (then a senator) that requires blending biodiesel and other clean fuels into the U.S. fuel supply. But today, that growth has ground to a halt, and hundreds of businesses around the country supported by this industry are hurting.

The most recent surprise to the biodiesel industry was a unilateral decision by the EPA to streamline Argentinian biodiesel imports into the United States. Under the RFS, sellers must prove that their fuels were grown on land that was cleared or cultivated before late 2007, but the new decision relaxes the verification and reporting requirements for Argentinian exporters. There was no public hearing or comment.

What was so bizarre about this change was that it came at a time when the U.S. biodiesel industry is in turmoil as a result of the EPA's disastrous ongoing delays in administering the RFS. For the second consecutive year, the administration has failed to finalize the standards, meaning the market has no way of knowing how much biodiesel and other renewable fuels will be required on an annual basis going forward.

This one-two punch has wreaked havoc on the markets. The result has been less biodiesel blending, causing some biodiesel producers to close and many others to slow or suspend operations. In addition to putting financial strains on the industry, it has also meant that America's diesel fuel is emitting considerably more greenhouse gases into the atmosphere.

Like all biodiesel supporters, I am hopeful that the Obama administration will reassert its leadership in this area. For starters, the EPA needs to immediately finalize a robust RFS that allows the biodiesel industry to keep expanding and maximize its capabilities. The fact is, thousands of investors all across this nation decided to take up the White House's challenge to produce, distribute, supply, and consume fuel that reduces our dependence on oil and helps to slow the pace of global climate change. But like every young energy industry that has come before, biodiesel needs stable policy to grow and mature.

Steven J. Levy is chairman of the National Biodiesel Board.

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