American GreenFuels slows production at New Haven facility

By American GreenFuels LLC | August 22, 2019

American GreenFuels LLC announced Aug. 22 it is reducing projected production for the fourth quarter of 2019, citing uneconomical feedstock prices and continued policy uncertainty from both Congress and the U.S. EPA. The $1 per gallon biodiesel tax credit lapsed at the end of 2017 and, though being considered for extension in both the House and Senate, remains unaddressed. Due to this tax credit uncertainty combined with continuing attacks on the Renewable Fuel Standard by the current administration, the tax credit must be reinstated retroactively for 2018 and 2019 to allow for biodiesel industry profitability.

Industry profitability took yet another blow Aug. 9 when EPA announced 31 exemptions from RFS obligations for small refineries. Past “small refineries” receiving these exemptions for “economic hardship” include those owned by profitable companies such as ExxonMobil, Chevron Corp., and Andeavor. EPA’s granting of small refinery exemptions has more than quadrupled since President Trump took office and is estimated to have resulted in billions of gallons of lost biodiesel and renewable diesel demand, per University of Illinois economist Scott Irwin.

“Enough is enough,” said Raf Aviner, president of American GreenFuels and parent company Kolmar Americas Inc. “We cannot justify buying more feedstock under these market conditions. Waiting 20-plus months for Congress to act on extending the biodiesel tax credit has been unbearable, but now to have EPA gut the RFS and kill demand for biodiesel is the last straw for us.”

Kevin Luddy, executive vice president and chief financial officer of American GreenFuels and Kolmar Americas, added, “The plant has been financially strapped for 20 months now, making expansion investments impossible, and we expect market conditions to worsen with the announcement of the latest small refiner exemptions. Throughout the financing, production and marketing channel, industry participants are all questioning how long we can continue to operate in this uncertain economic environment. Hopefully, Congress will make the decision to provide stability to this industry soon.”

“It is long past time for Congress to act on extending the biodiesel tax credit,” said Paul Teta, vice president of public and government affairs for American GreenFuels and Kolmar Americas. “In fact, they should be embarrassed for letting this important industry wither on the vine for almost two years without ensuring the extension of the biodiesel tax credit. What’s even more incredible is that this is an industry that was created by an act of Congress, and one that employs tens of thousands of hardworking Americans who make a product that helps reduce greenhouse gas emissions and preserve America’s oil independence.” Teta went on further to note, “Despite what they suggest, the oil and refining industries are not experiencing economic hardship because of the RFS—but you can be sure the biodiesel industry is experiencing economic hardship without the extension of the biodiesel tax credit and with EPA destroying biodiesel demand in violation of congressional intent to grow this renewable fuel sector. Now we can only hope that some sense of doing what is right occurs in Congress in the near term, leading to a reinstatement of the biodiesel tax credit before it is too late for this industry.”

A wholly owned subsidiary of Kolmar Americas, American GreenFuels is the largest biodiesel production plant in New England and along the Eastern Seaboard. Since Kolmar Americas’ acquisition of American GreenFuels in 2015, Kolmar has spent millions of dollars on upgrades and increases in production capacity. These advancements have yielded a four-fold increase in production capacity and more than doubling of employment—resulting in a current annual capacity of 40 million gallons, made by more than 50 dedicated employees, many of whom are veterans.

 

 
 
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