By Sending Mixed Signals to Industry, White House Imperils Growth of Clean Energy

Posted on October 20th, 2014

As first published by Roll Call:

anne_steckel_blog_01Vice President Joseph R. Biden Jr. recently told an energy conference on Wall Street, “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.”

The vice president’s comments are part of an ongoing effort by the President Barack Obama administration to aggressively tackle climate change by sending American industry a clear message: Investments in carbon-intensive fossil fuels will carry increasing risks while clean energy will show a good return on investment.

But when it comes to renewable fuels, the administration is sending mixed signals that could have negative ramifications for years to come.

I’m referring to the administration’s curveball proposal to cut the volumes under the Renewable Fuel Standard, a market-based policy that requires petroleum companies to blend a growing portion of clean, renewable fuels into their carbon-heavy petroleum fuels. The proposal took a hatchet to a wide variety of biofuels, but particularly surprising was the effective cut to biodiesel – the diesel replacement fuel made from a variety of plant oils, recycled cooking oil, and animal fats.

Based on the White House’s efforts to spur American industry to invest in clean energy, one would assume the Obama administration is eager to continue growing the biodiesel sector. After all, it is the first Environmental Protection Agency-designated Advanced Biofuel to reach commercial-scale production nationwide. According to the EPA’s own analysis, it reduces greenhouse gas emissions by 57 percent to 86 percent compared to petroleum diesel. That’s more than double the 30 percent reduction goal laid out in the administration’s recent proposal for power plants.

Further, Obama has vocally supported biodiesel throughout his political career. While campaigning for re-election in 2012, he assured the biodiesel industry it was in good hands under an Obama White House. Entrepreneurs and investors took the president at his word and responded by investing millions of dollars in plant expansions, new technologies, and larger workforces.

And the efforts were clearly working. When Congress created the RFS with bipartisan support in 2005, biodiesel was a niche fuel with around 100 million gallons in production. Nearly a decade later, biodiesel producers in 2013 built a record U.S. market of nearly 1.8 billion gallons. Anyone filling up a diesel vehicle in America is likely getting a biodiesel blend.

nbb_blog_mixed-signals_300x194_01So when the EPA proposed cutting biodiesel production back to 1.28 billion gallons for 2014, the industry was stunned. Biodiesel producers understood such a sharp contraction would force many companies to close their doors, lay off employees, and watch their investments go up in smoke.

The proposal also sent a signal to energy investors and the market that the administration’s support for the RFS could be on shaky ground. Biodiesel producers nationwide have scaled back production, delayed expansions, sent workers home, and gone into wait-and-see mode. Some have shut down altogether as markets weakened and capital dried up. This damage will only grow if the proposed RFS is finalized into law.

It’s almost the end of the year, yet no final decision has been made on the 2014 RFS. The delays have been disastrous, but the industry maintains hope that the White House will correct its course and issue a final rule on biodiesel that reflects Obama’s previous support and gets production back on track.

If not, many investors and entrepreneurs will lose the investments the White House urged them to make, and we’ll burn hundreds of millions of gallons of additional petroleum diesel in the years to come.

That would not just hurt the biodiesel industry, it would undermine the White House’s entire clean energy push as would-be investors sit on the sidelines fearing that a “here today, gone tomorrow” policy could strike them too.

Anne Steckel serves as the Vice President of Federal Affairs for the National Biodiesel Board.

Leave a Reply