Argentina: More Biodiesel Exports to US

STREATOR, Ill. (DTN) -- After a change in policy by the Environmental Protection Agency regarding soy-based biodiesel imports to the United States from Argentina, the Argentine Biofuels Chamber, known as Carbio, projects it would increase exports to the U.S. this year by 50%, or 30 million gallons, to 90 million gallons.

Argentina already ships biodiesel to the U.S. market, with that supply qualifying under the D4 biomass-based diesel category of the Renewable Fuel Standard. On Jan. 27, the EPA issued a new rule that makes it easier for biodiesel from Argentina to qualify under the RFS if the soybean oil feedstock is audited by a third party.

Luis Zubizarreta, president of Carbio, told news media Jan. 30 that exports from the South American nation in 2014 to the U.S. totaled 200,000 metric tons or roughly 60 million gallons. This year Zubizarreta said exports would climb 50% to 300,000 metric tons, which equates to 90 million gallons.

The National Biodiesel Board, a U.S. trade organization, has been critical of the EPA's decision regarding biodiesel imports from Argentina.

"This application [for Argentina biodiesel] was approved without public comment or hearing, at a time when we don't have a functioning RFS," Ben Evans, director of public affairs and federal communications, told DTN last week.

The EPA has failed to finalize the RFS Renewable Volume Obligation for 2014 and 2015 as required by statue after proposing in November 2013 a target of 1.28 billion gallons for the D4 category for 2014. Should 1.28 billion gallons also become the RVO for 2015, Argentinean biodiesel imports of 90.0 million gallons as projected would represent 7.0% of that target.

"It is inexplicable that the agency charged with implementing the RFS would put a priority on approving an optional application from a foreign country to streamline imports under the RFS when the core RFS program has not been implemented for two consecutive years."

Evans added the Argentinian government "props up" its biodiesel production through a Differential Export Tax program in which the export tax that Argentina has historically charged on the soybean oil has been higher than the tax charged on exports of biodiesel.

"In other words, Argentinian biodiesel producers are encouraged to ship finished biodiesel rather than raw soybean oil out of the country," Evans said. "The DET policy in Argentina and the approved application from EPA will likely have a devastating impact on U.S. biodiesel producers."

"The main problem is U.S. biodiesel is expensive," said Jerrod Kitt, strategist for the Linn Group, Chicago. "The Argentine stuff has a lower cost of production, so they can ship it to us relatively cheap."

Kitt also thinks Carbio is downplaying its estimate of how much biodiesel Argentina would export to the U.S. this year, with the strategist projecting exports of 112.5 million gallons. If realized, that would account for nearly 9% of the 1.28 billion proposed RVO target for 2014.

"There is a potential for them to be much higher this year," said Pete Moss, biodiesel analyst and president of Frazier Barnes and Associates, Memphis, Tenn., who agreed with Kitt's assessment. "Either way, it is too much for a market that has no official RVO."

Myke Feinman can be reached at myke.feinman@dtn.com

(BM/AG)

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