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Corn+Soybean Digest

Soy Diesel Needs Certainty

American Soybean Association (ASA) leaders say that if federal officials wanted to damage the biodiesel industry they couldn’t do a much better job of it than they are now, presumably unintentionally.

Testifying before a House Small Business subcommittee on May 21, an ASA spokesman said uncertainty over federal policy on a variety of fronts is undermining investor confidence in the biodiesel industry at a time when it needs all the help it can get.

At the top of ASA’s list of regulatory policy concerns is the Environmental Protection Agency’s Notice of Proposed Rulemaking for implementation of the expanded Renewable Fuel Standard-2 (RFS-2). The rule, released on May 5, includes a number of flaws and concerns, according to ASA officials.

“The proposed rule contains unprecedented, untested and far-reaching indirect land use assumptions and projections which will adversely impact markets for U.S. farmers and impede efforts to reduce dependence on foreign oil and improve our environmental footprint,” said ASA Vice President Ray Gaesser.

“We are concerned that EPA has attributed an undue degree of land use causation to U.S. biofuels production and that EPA’s assumptions do not adequately consider the other market factors (population growth, food and feed demand, timber prices, etc.) that have historically driven international land use decisions.”

Gaesser, a soybean producer from Corning, IA, testifying before the Subcommittee on Regulations, Healthcare and Trade, said ASA believes an expanded RFS-2 that includes a specific minimum use requirement for biomass-based diesel is a necessary and beneficial program.

“A workable RFS-2 is necessary to move the country toward energy independence and clean, renewable energy production,” he said. “The current market demonstrates the production and use of biofuels is not economically viable when petroleum prices are low. Combined with the extension of the biodiesel tax credit and the implementation of the Bioenergy Program, the RFS-2 could provide some much-needed market certainty for U.S. biodiesel production.”

He said ASA is concerned with the potential under the EPA Proposed Rule to require renewable fuel manufactures to prove that their feedstocks meet the definition of renewable biomass. The Energy Independence and Security Act included a prescriptive definition of renewable biomass and the EPA Proposed Rule would limit eligibility to biofuels produced only from feedstocks grown on existing cropland.”

This requirement could result in the need to provide feedstock certification, he said, adding, “Such feedstock certification would be onerous and unworkable.”

In most cases, soybean processors do not know precisely where their soybeans come from, he noted. Most processing plants buy soybeans from local elevators as well as direct from farmers. The local elevator does not know who delivered what soybeans once they go into storage.

“In the case of some processors, they buy all of their soybeans from local cooperatives with very little direct delivery,” said Gaesser. “Under the EPA Proposed Rule, they would need to get certifications from the hundreds of thousands of producers who deliver soybeans to a cooperative, who in turn deliver soybeans to the processor.

"EPA does not provide a clear method to implement this feedstock certification, and they must recognize the challenge it would present. This is a great concern for farmers and our industry partners and will be the subject of significant attention as we develop formal comments and response to the EPA Proposed Rule.”

In addition to ASA’s concerns with significantly flawed indirect land use assumptions and unworkable feedstock certification proposals, ASA is seeking implementation by USDA of the Bioenergy Program for Advanced Biofuels, which was funded in the Energy Title of the 2008 Farm Bill. Implemented properly, it could provide much needed assistance to U.S. biodiesel producers.

“The purpose of the Bioenergy Program for Advanced Biofuels is to provide payments to eligible producers to support and ensure an expanding production of advanced biofuels,” Gaesser said. "USDA has not issued proposed rules or a notice of funding availability for the program as of yet. Our primary requests are to have the program implemented in a timely manner and provide payment on all gallons of eligible biodiesel produced retroactive to Oct. 1, 2008.”

Soy biodiesel advocates claim it is one of the cleanest-burning biofuels in commercial existence today. “It is a renewable and sustainable energy source that can play a significant role in our national efforts to increase our energy security and improve our environmental footprint,” Gaesser said. “Biodiesel has also provided a significant market opportunity for U.S. soybean farmers and jobs and economic development for rural communities.”

ASA’s complete testimony.

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