US biodiesel producers challenge rising Argentinian imports

04.10.2016

US net imports of biodiesel from Argentina jumped to 43,000 b/d in July, up 65% from June and the highest level on record -- a trend that has pushed US producers to fight for changes to a key tax incentive.

The July data, which the Energy Information Administration released Friday, showed US net biodiesel imports from Indonesia falling sharply to 4,000 b/d, from 15,000 b/d in June.

The US was a net biodiesel exporter to Canada at 2,000 b/d in July, swinging from a net importer of 4,000 b/d in June.

The National Biodiesel Board argues that rising imports from Argentina, Indonesia and Singapore represent unfair competition if they receive tax credits at home, and again when they land in the US.

Just like domestic fuel, the imports are eligible for a $1/gal tax credit that goes to the blender.

Congress has taken up the group's effort to switch the blender's credit to a producer's credit and to extend it through 2019, rather than having to revisit the incentive every year.

The bills were introduced by Senators Chuck Grassley, Republican-Iowa, and Maria Cantwell, Democrat-Washington, and Representatives Kristi Noem, Republican-South Dakota, and Bill Pascrell, Democrat-New Jersey.

"American biodiesel producers deserve a level playing field, and US energy policy should be aimed at incentivizing domestic production and jobs, not foreign fuel," NBB spokeswoman Jessica Robinson said.

Robinson said the imports are making it harder for US producers to use their full capacity of around 3.1 billion gallons.

But Michael McAdams, a senior policy adviser at Holland & Knight, said NBB may have miscalculated in its Capitol Hill strategy and could come up empty handed when the blender's credit expires at the end of this year.

"I'm very fearful this year that we're not going to get any bill because there are fewer tax provisions in the extenders package than there have been in the past," he said. "I think they may have cost everybody an extension of the current law."

Adams, who represents the Advanced Biofuels Association and 32 companies including some of the biggest importers, said congressional staffers conveyed to his clients in meetings last month that their bosses have little appetite for approving anything but technical corrections in the tax extenders package.

He said the blender's credit encourages blenders to increase their capacity through efficiencies, which lowers biodiesel prices all the way through the supply chain.

"Making it a production credit is simply just a handout to the guy that makes the fuel who doesn't spend a dime to do anything about getting it into the marketplace," Adams said.

NBB acknowledges that it will be a challenge to get any legislation through the current congressional gridlock.

"But this has the advantage of being something that really makes sense for American energy, and it makes sense across party lines," Robinson said.


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