In
its mission statement, the National Biodiesel Board has a simple goal.
By 2015, the Jefferson City, Mo.-based trade group would like to see 5%
of the U.S.' diesel needs met by biodiesel, a fuel made for diesel
engines from feedstocks such as animal fats, greases and vegetable oils.
The
U.S. goes through 60 billion gallons of diesel annually. In 2007, 500
million gallons of biodiesel were produced. So for the National
Biodiesel Board (NBB) to complete its 2015 mission, biodiesel
production will have to increase at a 29% annualized clip over the next
seven years.
Six years ago, biodiesel production stood at just
15 million gallons, implying a headturning 111% yearly growth rate
since. But maintaining the momentum will be tough. The industry faces
loud skepticism from environmentalists, who fret about biodiesel and
byproducts getting dumped into streams, and economists who question
whether biofuels can ever be viable without heavy government support.
So
a favorable terrain in Washington will be key, as the biodiesel
industry's biggest players make clear. In its annual report, for
example, biodiesel refiner Nova Biosource Fuels warns investors that
the "U.S. biodiesel industry is highly dependent on a myriad of federal
and state legislation and regulation."
So Manning Feraci, NBB's
vice president for federal affairs, has his work cut out for him.
Feraci, 37, is one of two people in NBB's Washington outpost (he's
looking to hire a third). He signed on with NBB last May after 14 years
working for two Missouri congressmen.
Feraci doesn't have huge
institutional advantages at his disposal. NBB has just 15 employees
total and a budget of $11 million. But the group does have a reasonably
straightforward federal policy outlook. Feraci describes the NBB's
priorities as having three primary parts: a renewable fuels standard,
tax credits for biodiesel use and price subsidies for feedstocks used
in biodiesel production.
"Those are the three that keep me well occupied," he says.
The
first priority, the renewable fuel standard, is already largely in the
bag. In December, President Bush signed The Energy Independence and
Security Act of 2007. The law passed with healthy 314-100 and 86-8
margins, respectively, in the U.S. House of Representatives and the
U.S. Senate. It mandates the use of 36 billion gallons of biofuels by
2022. For diesel made from renewable sources, the law sets a minimum of
500 million gallons by 2009, rising to 1 billion gallons by 2012.
A
more pressing priority is tax credits. "If the tax incentive doesn't
get extended," says Feraci, "that could certainly present difficulties
for the industry."
The measure in question expires at the end of
this year. Enacted in 2006, the Biodiesel Blenders Tax Credit provides
a $1.00 per gallon excise tax credit to those blending petroleum diesel
with biodiesel from virgin feedstock, including animal fats. Biodiesel
derived from recycled feedstock, such as grease, gets 50 cents per
gallon on blending.
Feraci likes his odds on renewal, citing
big bipartisan support. The House has already passed an extension three
times, while the Senate's version of the so-called Farm Bill--a
gigantic piece of agriculture legislation likely to pass this
year--contains a two-year extension.
As he presses his case on
Capitol Hill, Feraci can also count on support from an NBB membership
roster that continues to expand outside its traditional Midwestern
roots. By the NBB's tally, there are 171 biodiesel refineries in the
U.S., with 55 under construction.
If "there's biodiesel
production going on in your home state, perhaps in a member's
congressional district," Feraci says, "it makes it more tangible."
NBB's
third priority is reducing feedstock costs, which make up 70% to 80% of
the cost of biodiesel production. Its means to do is reauthorization of
the U.S. Department of Agriculture's Commodity Credit Corporation
Bioenergy Program. Expired in 2006, the program provided biofuels
producers $150 million in annual reimbursements for use of certain
commodities, including biodiesel feedstocks such as canola, soybeans
and rapeseed.
The fate of the Bioenergy program is now tied to
the Farm Bill, versions of which have passed the House and Senate. The
former's version funds the bioenergy program at levels rising from $250
million to $350 million fiscal 2012, while the Senates sticks with a
flat, annual $245 million number.
"We're hopeful that they will get it done," says Feraci.
Forbes
