How badly is COVID-19 slamming biofuels industry? 30% reduction of ethanol production capacity, nearly half offline in coming weeks?

Will there be M&A activity like in 2008-09?

When asked if he thinks we might see a wave of M&A as we saw in 2008-09 when we had some of these same market conditions, Geoff Cooper at Renewable Fuels Association told The Digest, “It is hard to guess what structural changes the industry will go through as a result of the pandemic, but it is probably safe to say the industry will look different on the other end of this crisis.”

Emily Skor at Growth Energy told The Digest, “It is hard to say exactly what happens until we have a better sense of when we return to normal on fuel demand, but we already know that market conditions are really pushing plants to the breaking point.”

There is optimism in the air from the biodiesel side, with Donnell Rehagen from the National Biodiesel Board who told The Digest, “Once we get through the current uncertainty that is ahead of us in the near term, I believe the future of biodiesel and renewable diesel in America is extremely bright. Our organization sees a future where biodiesel, renewable diesel, and renewable jet fuel will exceed six billion gallons by 2030 and 15 billion gallons by 2050.”

“We closed out 2019 with a monumental policy win after a two-year period of uncertainty that took a toll on our industry. The reinstatement of the biodiesel tax credit that provided much-needed retroactivity for 2018 and 2019 and a forward-looking credit through 2022 was monumental. Three years forward is the longest time period the industry has been able to count on the credit since it was first introduced in 2005.”

“All that is to say that we’ve seen some significant changes in our industry’s landscape over the last three years, and that has included some assets changing ownership. As we continue to grow and change, I wouldn’t be surprised to see some assets that went idle during the last downturn to come back online in 2020, though that recovery is being delayed by the current emergency. In 2019, 10 biodiesel producers shut down or cut production due to economic factor such as small refinery exemptions; so far, only one has reopened.”

Continue reading to find out what actions ARE and COULD alleviate the pain for the industry.