Crushed Margins: The uncertain outlook for biodiesel in North America
This report comes at a critical juncture for the North American biodiesel industry facing: crushed margins, overcapacity, rationalisation and unworkable legislation. Not only is the North American biofuels industry a creation of a confusing mix of state and federal policies, but key aspects of the legislation are not working. Most importantly, the expectation that biodiesel might, in addition to its one billion gallon mandate, fill the bulk ‘undifferentiated’ standard for advanced biofuels is simply not possible. Furthermore, without the highly profitable EU export trade, the outlook for biodiesel exports is also in doubt.
The new US Administration and its Canadian counterparts will be forced to think the previously unthinkable, such as delaying the mandates, and in doing so, challenge the original objectives behind the renewable fuels legislation. Naturally there will be Winners & Losers with dramatic implications for:
- US and Canadian Agriculture in deciding the relative profitability of crops — soybeans, corn and wheat — as the battle for acres intensifies.
- The prospects for domestic Biodiesel Producers as they face competition from international biodiesel producers such as Argentina and Indonesia.
These are just some of the conflicting issues that are addressed in LMC’s recently completed report. This report cuts through the jargon and the complex legislation to explain where the North American market now stands and provides a medium-term economic perspective under a range of scenarios and policy options.