Domestic Producers Look to Fill Gaps in Supply Chain
By Samuel Diamond
It doesn’t take special glasses to see a correlation between the imposition of tariffs on Argentinian biodiesel imported into the U.S. and the pronouncedly swift decrease in total biodiesel imported into the U.S.
According to EIA data, nearly 1.6 million barrels of biomass-based diesel were imported in August 2017. Of these barrels, more than 1.3 million originated in Argentina. At the end of the month, the Department of Commerce ruled that biodiesel production subsidies provided by Argentina violated international trade rules, and that importers of Argentinian biodiesel were to pay cash deposits on it ranging from 50.29 to 64.17 percent. The very next month, imports from Argentina fell to zero, and total U.S. imports fell to just 205,000.
While these numbers have raised concerns among heating oil suppliers in the Northeast, many of which sell biodiesel-blended Bioheat® fuel, biodiesel producers and distributors remain confident that there is and will continue to be more than enough product available to meet demand.
“We haven’t struggled to get product into any of our marketplaces,” says Michael Devine, Northeast Sales and Marketing Representative for AMERIgreen Energy, a wholesaler with biodiesel and Bioheat fuel distribution points in Pennsylvania, New Jersey, New York, Connecticut and Massachusetts. “The supply chain adapts, and that’s what we’re seeing now: U.S. domestic producers are looking at planting stakes here in the Northeast,” he adds.
Scott Hedderich, Executive Director, Corporate Affairs at REG, one of the world’s leading producers of advanced biofuel, points to the flow of biodiesel in the Northeast U.S. during the winter of 2017-2018 as evidence that import duties aren’t doing the damage some thought they would. “I don’t think companies that are delivering oilheat to homes and businesses have been impacted by the change in trade policy,” Hedderich says. “It has strengthened U.S. production and to date has had a negligible effect on supply and price in the Northeast.”
Through October 2017 (the last month for which data was available at press time), U.S. biodiesel plants had produced 1.297 billion gallons, putting them .016 billion gallons ahead of the 10-month total from January-October 2016. Annual domestic biodiesel production hit a record 1.568 billion gallons in 2016.
And there’s room for even more growth, according to National Biodiesel Board CEO Donnell Rehagen. At the organization’s National Biodiesel Conference & Expo in January 2018, Rehagen told attendees that domestic producers have 2.5 billion gallons of annual capacity “ready to go.”
Exactly where it will go, and for how much, remain to be seen. Regardless, biodiesel stakeholders are expected to keep close watch.
“There are some really interesting opportunities for biodiesel in the Northeast right now,” says Devine, who points specifically to the Massachusetts Alternative Energy Portfolio Standard (APS) program, as well as biodiesel-blending requirements in New York and Rhode Island. “Whenever you have markets where standards and volumes are guaranteed, producers are going to take a hard look.”
The New England Fuel Institute recently completed a study on regional biodiesel supply and pricing. Published results are expected soon.