Global Biofuels Blog

The Massachusetts Department of Energy Resources released this week its Program Design and Implementation Plan for implementing the biofuels mandate enacted under the Clean Energy Biofuels Act of 2008.  As previously reported by GBC (What’s New, July 28, 2008) the Act requires all home heating oil and diesel motor vehicle fuel sold in the state to include a 2% by energy content blend of advanced biofuels by July 1, 2010, increasing to 5% by energy content by 2013.

The most controversial aspect of the plan is a provision in which the department states that it will only accept Statement of Qualification Application forms (for purposes of compliance with the mandate) “for biofuels derived from waste feedstocks which, as defined and provided in the statute, are exempt from a detailed greenhouse gas reduction analysis, provided a preliminary analysis based on both CARB and EPA methodologies indicate such waste feedstocks will yield the 50% greenhouse gas reduction threshold in the Massachusetts law.”

The mandate has been postponed for a year and early action credits are permitted to encourage early compliance, but where the waste-oil biodiesel/heating oil will come from is anyone’s guess.  According to our production capacity database, there’s less than half a million gallons of capacity operating in Massachusetts right now, and less than 200 million gallons in the U.S.

Realistically, what is happening is the state is waiting for the RFS2 rulemaking to be finalized, including lifecycle assessment methodology, as well as for the state of California to conclude additional work in this area by the end of 2009 (for biodiesel pathways) so that it can utilize the methodology to assess whether advanced biofuels meet the thresholds established in the legislation (50% for diesel and heating oil substitutes).  Maybe a year’s delay brings the state that much closer to what it really wants: an LCFS…good luck with that!

As I noted in my last blog entry before a short summer hiatus, it would only be a matter of time before attention turned from the U.S. to other biodiesel producers and exporters, namely Argentina and Brazil.  It’s barely been a month and already the European Biodiesel Board is now “in dialogue” with the European Commission so that it can “react quickly” to evidence that U.S. and Argentinian producers and exporters are colluding so as to circumvent the recently imposed countervailing duties from the Commission.  Canada has been thrown into the mix as well.  Data from the International Trade Commission (ITC) through June 2009 suggests this is not the case.  Nevertheless, EBB maintains that there is an incentive to produce biodiesel in Argentina and export it to Europe because of the incentives available there which serve to undercut European biodiesel producers.

Canadian producers are now being watched also with EBB noting an increase in exports, but note there is no longer a federal excise tax credit or other advantageous incentives being applied that would impact exports to Europe.  The U.S. can export to Canada duty-free, which conceivably then re-export to Europe.  There is some evidence this could be the case as through June ITC data puts exports to Canada at approximately 761,000 gallons - hardly enough to foster a trade case!  What will it take to establish a level playing field for European producers, I still wonder?