Coping with the added pressure of the RFS

25th March, 2008

Now the Renewable Fuel Standard has been introduced, a considerable amount of new infrastructure is needed to supply and distribute the extra biodiesel

Biodiesel infrastructure in the US has grown very little in the past year, partly due to the increasing amount of exports outside the US. But now producers have received a minimum use standard, which begins in 2009. Will available infrastructure be able to increase to accommodate this? The National Biodiesel Board (NBB) reports that more than half of the 2007 US biodiesel production was exported. While current figures are hard to find, US biodiesel production was about 250 million gallons in 2006 and about 450 million gallons in 2007.

If roughly half of the production in 2007 was exported, it is safe to assume that the US probably experienced a modest increase in the volume of biodiesel available for domestic distribution.

Terminal locations in the US offering storage and blending of biodiesel increased by only 10 from 2006 to 2007, according to the NBB. The increase was reasonable but was far fewer than were predicted to handle the projected increase in biodiesel production.

RFS sets minimum use of biodiesel

At the end of last year, Congress passed a new energy bill (Energy Independence and Security Act of 2007- H.R. 6), with an expanded renewable fuel requirement. Beginning in 2009, petroleum producers and importers must use at least 500 million gallons a year of biodiesel or purchase the biodiesel credits for that volume. Under the Renewable Fuel Standard (RFS), credits for any volume of biodiesel exported are cancelled. On the flip side, importers of biodiesel into the US can issue credits when biodiesel is imported and used for on-highway use.

In order to meet the RFS minimum for 2009 the biodiesel industry must increase the volume of biodiesel in domestic supply by over 250 million gallons per year.

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