Clear Signals

On September 16, 2019, National Biodiesel Board CEO Donnell Rehagen addressed an audience of more than 300 energy professionals, primarily heating oil dealers from the Northeast U.S. Shortly after this presentation, he led a breakout session on biodiesel infrastructure and supply, engaging a smaller room of about 50 fuel producers, wholesalers and dealers. In both cases, Rehagen talked about the need for “clear signals.” Within the hour, the heating oil industry delivered exactly that via the Providence Resolution, a commitment to achieve 15-percent emissions reductions by 2023, 40-percent reductions by 2030 and a net-zero carbon fuel by 2050. Following the 2019 HEAT Show, Oil & Energy reached out to Donnell Rehagen to discuss the significance of the Providence Resolution and policy matters like the Renewable Fuel Standard and Biodiesel Tax Credit, as well as the heating oil and biofuel industries’ long history and shared future.

You’ve been with the National Biodiesel Board since 2004. How has the organization evolved since that time?
Since 2004, the National Biodiesel Board has seen monumental growth and made strides in the renewable fuels industry. When I joined in 2004, NBB had just 60 members and only a handful of biodiesel producers producing around 100 million gallons a year. I quickly came to realize that NBB was built around the premise of putting our collective heads down and just working to remove barriers to growth of our industry. Whether that was in federal or state policy, technical work, collaboration with OEMs, brand awareness, it didn’t matter.

I have always been impressed with the depth and breadth of our trade association and the huge potential America’s Advanced Biofuel offers our country. As I look back it is easy to reflect on the many challenges our industry has faced, but I am quickly reminded how we continuously come together as a collective voice and fight for our members.

The Renewable Fuel Standard and Biodiesel Tax Credit both have significant bipartisan support, yet there’s a constant fight to ensure the health and existence of these programs. What can trade associations, businesses and individuals that support these programs do to help?
We always welcome additional support to help us fight for our policy priorities on the Hill. One of the ways to have members join in as a united front is our newly relaunched advocacy web page, the Fueling Action Center on our revamped website at biodiesel.org. I encourage all our members and partners in the industry to share this new campaign with colleagues and even friends and family. The biodiesel industry supports 65,000 jobs across the United States and economic activity in many communities. We are asking our members to call on other companies, spread the word and encourage as many people as possible to engage in this effort.  Our Congressional champions are aggressively advocating for an extension of the tax credit, but it will only help their efforts if they are hearing from their own constituents. As a trade association, there is only so much we can do organizationally. At some point, House and Senate members need to hear from their own constituents with the real-life stories of how this policy instability is affecting them. It is critical that we do everything possible to ensure that tax extenders remain atop the priority list for Congress.In addition to the tax credit, The Environmental Protection Agency recently proposed a supplemental rule to project the volumes of gasoline and diesel that they will exempt in 2020 due to small refinery hardship waivers. The proposal comes in response to comments from the biofuel industry on the 2020 RFS volumes, a petition from NBB and other trade associations for the rulemaking, and a commitment from President Trump to ensure that the annual RVO [renewable volume obligation] for biomass-based diesel is met.EPA proposes to use an average of the small refinery hardship relief recommended by the Department of Energy over the past three years. I find this proposal from EPA to be especially alarming because the EPA, for the last three years, has regularly ignored the recommendations DOE has made. And now we are to believe they want to follow those recommendations going forward. For the record, DOEÕs recommendations are about 40 percent lower than EPA’s actual exemptions. Comments from our industry on the annual rule asked EPA to use the actual volumes that EPA exempted over the past three years as a basis for future estimates. NBB’s Fueling Action Center provides a template for individuals to submit such comments. Anyone who uses the site can adjust the template and personalize the comments, provide information particular to themselves and their company, and then submit comments directly to the rule docket.We’ve made our Fueling Action Center extremely simple and quick to use. And the biodiesel tax incentive and RFS remain perennial fights. So, we encourage people to reach out now to add their voice to the campaign and keep checking back often to keep the volume turned up.

The NBB and NEFI have strengthened their ties over the past few years. In addition to advocating for policies of mutual benefit, how can these organizations and their members further support each other’s industries and businesses?
I’m thrilled we have partnered over the past 25 years and I’m most proud of how we’ve recently come together again to support a cleaner, greener future. I feel there are numerous ways our initiatives can overlap – providing customers with quality, clean heating being top of mind. The heating oil and biodiesel and renewable diesel industries work together to provide homes and businesses with low-carbon fuel options. We are excited to see this partnership strengthen and look forward to a continuing collaboration.

Following the 2019 HEAT Show, you called the Providence Resolution “a significant market signal, and opportunity for growth, for Bioheat¨ fuel.” What kind of response have you seen from biodiesel and renewable diesel producers and distributors?
Our members are excited about the Northeast. We have had great relationships there for a long time with all the work we have done in partnership with the home heating industry to promote Bioheat¨, as well as the work we have done with the City of New York, for example, and leading institutions like Harvard University. Our members love the Northeast and are excited to take the next step there. Having clear signals about the goals of the heating oil industry is critical for our industry to make investment decisions to ensure supply needs are met.

Meeting the emissions targets of the Providence Resolution will require a large influx of biofuels into the Northeast region in the years to come. What needs to happen to ensure that required production and supply infrastructure are available in the next three to 10 years?  
The first step was the clear signal from the heating oil industry. Now that the Providence Resolution has provided that, our industry will have to establish a roadmap that details supply surety, logistics, storage and distribution to be certain these goals are achieved. There will also be a need to elevate consumer awareness with both fuel dealers and their customers. Minnesota has a statewide standard of B20 and California now has an average blend of 15% biomass-based diesel, so this isn’t really a new challenge for us. We just need to put in the work to make it happen. The Renewable Fuel Standard will continue to provide a floor for biomass-based diesel production after 2022 Ð the program does not expire, as some people say. But the industry will have to continue to fight to ensure that the RFS supports continued, sustainable growth over the long term. The Environmental Protection Agency will set volumes for all renewable fuels for 2023 and beyond using the same process they’ve used to set biomass-based diesel volumes since 2013. The agency can set higher volumes. It’s my belief that is what Congress intended when they created with RFS. But our experience has been that the agency does not set volumes as high as we’ve proven that we can achieve.For 2023 and beyond, it will be very important for EPA to clarify its process and understand that setting the advanced volumes is not sufficient to drive biomass-based diesel growth.

Also during the HEAT Show, there were some talks about advocating for a Northeast fuel standard — i.e., a Low Carbon Fuel Standard or “LCFS” — for home heating oil.  How have you seen that program’s success duplicated in states outside of California, and can you foresee the same thing happening in the Northeast? What kind of opportunities might an LCFS create for businesses in the region, and what challenges would need to be overcome?
All of the Northeast states have comprehensive greenhouse gas reduction goals in place. New York, for example, just passed an economy-wide policy that requires a 40% reduction in GHGs by 2030. So, there are major changes on the horizon for the fuel industry. Will the policy mechanism be an LCFS, a carbon tax, or a cap-and-invest model? We’ll see. But what we know is that there will be a major shift toward cleaner fuels like biodiesel in the marketplace. That is great news for consumers, obviously, but it is also good news for the home heating industry because, with biodiesel, they have a clear path to achieving those large-scale GHG reductions. The heating oil industry can now step up with a solution, and one that is here now. The challenge will be ramping up production in the Northeast and transporting additional biodiesel to the region. But we’ve shown we can do that in states like California and Oregon that ramped up very quickly, and I have no doubt that success can be replicated in the Northeast.

The National Biodiesel Conference & Expo comes to the East Coast January 20-23, 2020. Some of our readers who are heating oil dealers and service professionals might be thinking of attending for the first time. What can they expect from the event?
The National Biodiesel Conference is a must-attend event for the industry. Each year hundreds of biodiesel leaders from across the country gather for the conference to engage in thought provoking discussions to help advance America’s Advanced Biofuel. This year we will be hosting a main stage panel session, Catching the Heat Wave, with participants Sean Cota, New England Fuel Institute; Charles Uglietto, Cubby Oil & Energy; and Michael Ferrante, Massachusetts Energy Marketers Association. This will give attendees the chance to hear from prominent leaders on their vision for Bioheat¨ as a key player in the climate change discussions happening in the halls of the government, local communities, and even dinner tables across America. In addition, we will also have an XBX session presented by NBBÕs Paul Nazzaro, examining biodiesel’s growing prominence in the liquid fuels supply chain.This year we are hosting our conference in sunny Tampa, Florida. Those interested can find more at our conference website at biodieselconference.org.

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