By Jon Scharingson, Renewable Energy Group Inc.
It would be easy to cast the Volkswagen emissions scandal from last year as bad news for diesel fuel.
But that would be a mistake.
The Fuels Institute has the data to back that up. The nonprofit think tank, which is dedicated to researching market issues related to vehicles and fuels, conducted a survey while the news coverage of VW was at its peak. It found that nearly the same percentage of respondents in the market for a car said they’d consider a diesel-powered vehicle as did in a 2014 survey.
“It doesn’t make diesel bad,” said John Eichberger, executive director of the Fuels Institute. “The public thinks Volkswagen screwed up.”
Diesel is trending upward among consumers. The U.S. Energy Information Administration predicts that transportation distillate fuel consumption will increase nearly 23% between 2013 and 2040, during which time gasoline consumption will drop 21%.
The main reason for that, it says, is “increasingly stringent fuel economy standards.” Government regulations and a desire among drivers for vehicles with lower emissions are among the reasons the current environment is positive not just for diesel but for biodiesel in particular.
Around the same time VW was making headlines, the California Air Resources Board readopted the state’s Low Carbon Fuel Standard, which requires the reduction in carbon intensity in transportation fuels. In doing so, the board determined that biodiesel had the lowest carbon impact among fuels — besting gasoline, ultra-low sulfur diesel, ethanol and compressed natural gas (CNG).
The good news continued for the biodiesel industry and its partners, such as convenience stores, as 2015 came to close.
In November, the federal government increased the amount of biomass-based diesel, which includes biodiesel and renewable diesel, to be blended into the U.S. fuel stream under the Renewable Fuel Standard (RFS2).
Then, just before Christmas, Congress and President Barack Obama delivered some early holiday cheer with the reinstatement of the federal biodiesel tax credit. The $1-per-gallon tax incentive, which applies to biodiesel and renewable diesel, was made retroactive to Jan. 1, 2015, and extended through the end of 2016. It will remain a blender’s tax credit that can be claimed for fuel blended in the U.S.
We have already seen the tax credit create improved blender economics for c-stores, and this could produce new opportunities for discretionary blenders throughout the year.
All of these factors — rising diesel consumption, environmentally conscious drivers, increased biodiesel volume obligations under the RFS, positive blending economics — make this new year a great time for C-stores to enhance their product offerings by including diesel and biodiesel.
Jon Scharingson — Jon oversees the sales and marketing efforts for Renewable Energy Group Inc., a leading biodiesel producer.
