Changing of the Guard: 5 Minutes on 2017 and beyond with US biodiesel’s new commander-in-chief.

In case you hadn’t heard, the US conducted a national election yesterday and the voters opted for change, in a big way.

In the world of biodiesel, we also have a new Commander-in-Chief just elected. But in this case, the National Biodiesel Board’s members opted for continuity, by selecting longtime Chief Operating Officer Donnell Rehagen as the group’s new CEO. We profiled Rehagen’s election here.

The new CEO spent time with the Digest today outlining the NBB’s priorities and perspective.

Digest: It’s a week of talk of transition. How has the transition been so far at NBB?

Rehagen: Just great. I’ve been in the organization for 12 years, so it’s not exactly baptism by fire. The COO role allowed me to get involved in every area, and acquire deep knowledge over the years of what we do, the people we work with. So, we’ve been able to hit the ground running. Always, when there’s change, in Washington or here, everyone has a nervousness based in wondering how things we go. But there’s a lot less of that for our members than for the voting public right now, because the NBB and myself are known entities.

Digest. You and the President-elect both support a strong Renewable Fuel Standard, so there’s a starting point. What are your initial impressions of the election results, both at the top of the ticket and farther down the ballot?

Rehagen: We are very happy about the Renewable Fuel Standard, which is a critical component for us. He believes in the RFS, and we certainly believe in it too. President-elect Trump speaks a lot about performance, and gauging how you perform, and the RFS is a highly performing policy that accomplishes exactly what congress intended. We’d like to see some aggressiveness from the EPA in terms of volumes, but when it comes to the President-elect, we welcome working with anyone interested in biofuels, which has bipartisan support. But we’ll let the administration settle in and then get to work.

Digest: As you look at 2017, what do you expect to be the major themes and opportunities that you’ll be looking at with your members?

Rehagen: Obviously, in this transition we are going be very much in touch as appointments are made and policies begin to shape up. DOE, EPA and USDA — these are all-important to us. But as a starting point, where this incoming Administration has expressed its views on agriculture policy, everything has been very good.

Digest: The latest we’ve heard is that the Renewable Volume Obligations are on track to be released before the end of the month. What have you heard?

Rehagen: As it happens, we just got back, we traveled on election day and met with a number of OMB people yesterday. The proposed rule was moved from EPA to OMB a few weeks ago, and they are on track to meet the Nov 30 target.

Digest: We’ve always been very poor predictors of Renewable Volume Obligations for the coming year — do you have more success with picking numbers in your crystal ball, and what do you foresee?

Rehagen: If I was great at picking numbers, I probably would be buying lottery tickets at the moment, but we already know a lot, even if we can’t yet pick a precise number,. The EPA has proposed a 2.1B gallon RVO for 2018, and that’s a 100M gallon increase over 2017. Our message is “hey guys, we are already producing more today and we produced more than that in 2015 as well. Setting a goal for 2018 that is less than 2015 production doesn’t stretch industry and encourage investment.

Digest: Your preferred number?

Rehagen: We would like a target of 2.5B gallons for 2018, and even that would not be a major stretch.

Digest: Some have expressed concern that big targets will result in higher prices at the pump? Do you agree?

Rehagen: Prices will not have to rise, we are confident about that. And one of the unique things about the RFS and how the volumes are set up is that we have to sit down with EPA and justify facts and data. So we have good grounds to ask for higher volumes.

Digest: Before the new Administration is inaugurated, we have the lame-duck legislative session which picks up shortly. We’ve heard everything from “not a chance!” to “Why not?” on tax extenders. What have you heard?

Rehagen: We’ve heard the same range. But we have heard recently, and seen that the House leadership has interest in addressing the tax extenders, and Majority Leader McConnell has expressed interest, and the current Administration as well. So we still expect that something might come up. The results were a little bit unexpected last night, and I think we are all cautious at the moment while we see how the elections re-shape the landscape for tax extenders.

Digest: The NBB has proposed shifting from a blender’s tax credit to a producer’s tax credit, which would favor domestic US production. At first glance, that would seem in line with the Trump pro-American manufacturing vision, is the election helpful in that respect?

Rehagen: It’s definitely helpful. Our industry and organization exists to ensure the success of US biodiesel production, and we believe a producers credit furthers that cause and is more consistent with US energy policy since 2005. Look, we’ve seen the dynamics of the world markets change and evolve — as they always do. Even 5 years ago, the import of biodiesel wasn’t a big deal. But now it is very, very significant. This year, we expect to see imports of more than 600 million gallons. The producers credit gives the domestic producers the incentive to increase their invest.

Digest: Why?

Rehagen: Right now, the blenders credit is applied at whatever point that biodiesel enters the fuel supply. The credit is agnostic to where it comes from, With a producer’s credit, domestic production receives the incentive. That’s a big difference. Do we, the US, want to offer a tax incentive for product that doesn’t employ, necessarily, any Americans. When you give a tax incentive, you are trying to have an economic impact, and we think a producer’s credit accomplishes that.

Digest: If domestic production is incentivized and volumes are given a stretch target, will we see more diversification of feedstock to ensure prices don’t surge for domestic biodiesel?

Rehagen: There might be a misconception about feedstocks used today. Right now, about half of the feedstock is soybean oil. The other half is out of waste oils, recycled fats, corn oil. Things that are already out there, and things that no one else wants and end up in the waste stream. So, we’ve seen a  lot of diversification. Now, for our industry to continue to grow and get to 4-5-6 or even 10 billion gallons, we’ll need to see growth in new feedstocks, and we are eagerly looking to see how scientists are working to deliver those choices.