OPINION: Bioheat in the Age of Trump


By Michael Devine

I believe that it’s fair to speculate that most historians will remember the year 2016 as the year that the American people elected Donald J. Trump as the 45th president of the United States. The year 2016 was also, on a different note, one of the best years ever for heating oil marketers to blend biodiesel. Biodiesel blend margins started out nominal early in 2016, but as we moved into the summer months we saw the blend economics explode. Those heating oil marketers who marketed B-20 blends (20% biodiesel) were able to lock in forward differentials and fixed pricing programs for the majority of their upcoming heating season, and effectively “made their margin” for the heating season before recording a single degree-day.

As we move into 2017, the biodiesel markets are admittedly somewhat paralyzed. There are huge unknowns that the biodiesel markets are grappling with. The new government administration does not appear as friendly towards the renewable fuels industry as prior administrations, but it is still early. Many producers are taking a wait-and-see approach to 2017 production. While Trump expressed strong support for the RFS as a candidate, his selection of Scott Pruitt as his pick to lead the Environmental Protection Agency (EPA) raised eyebrows. Pruitt was the attorney general of Oklahoma, a big oil state and has a history of suing the EPA.

There was a recent positive sign however, to the RFS markets as Pruitt voiced support for both the RFS and the “rule of law” in January meetings with a group of Midwest Republican senators. Iowa’s senior U.S. senator, Chuck Grassley, said in a statement, “We got a very positive response on Mr. Pruitt’s support not just for the RFS, but more importantly, for the rule of law. The rule of law is that what Congress passed, the EPA is supposed to follow and not undermine it, the way that previous administrations have done with the RFS.”

The other federal policy concern for the biodiesel market moving in 2017 is the biodiesel industry’s lack of optimism regarding a biodiesel tax credit (BTC) extension, as the BTC lapses again, for the fifth time. With the Republican Party now having a majority in both houses of Congress, we are likely to see what might be described as the single-largest tax-reform bill since 1986. The fear is that Congress and the Trump White House might decide to eliminate many of the existing energy tax credits. What used to be referred to as a collection of tax extenders is now likely going to have each energy tax credit considered on its individual merits, with differing biodiesel interests lobbying against one another. Should the biodiesel tax credit remain as a blenders’ tax credit or should it be made a producers’ tax credit? Biodiesel’s detractors will be in a very good position to make the case that since biodiesel is already receiving a RIN, why would the industry still need a tax credit at all? The possible lapse of the biodiesel tax credit as well as Trump’s decisions on cabinet appointments have created a lot of anxiety in the biodiesel markets, causing a number of producers to decrease production.


Those of us who have come to realize the highest value of the biodiesel gallon over the years have found that the profits are not only generated from a blend margin; growing gallons is contingent on reinforcing Bioheat’s benefits to the consumer. Bioheat marketing is all about an entrepreneurial attitude, packaged in an altruistic message to the oil heat consumer.


The writer of this opinion piece, Michael Devine, handles business development for Amerigreen Energy, Lancaster, Pa. Amerigreen is a privately-held wholesaler that sells biofuels, refined products and propane, among other products and services, to retail distributors in the Northeast.


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