The higher cost of biodiesel compared with petroleum-based diesel fuel, especially in the third year of low global crude oil prices, requires a bridge to incentivize demand, and for several years the biodiesel industry in the United States has had those incentives amid multiple government programs.

Indeed, the US biodiesel industry ratcheted up production from 20 million gallons in 2003 to 2.1 billion gallons in 2015, according to the National Biodiesel Board, with an increasing amount of output, 24.5% of the 2015 total, renewable diesel. NBB, the industry’s national trade organization also reports 2.1 billion gallons of biodiesel was used in the United States in 2015.

The US biodiesel industry is an exceptional growth story, but also a challenging one that has seen a large number of bankruptcies, and frustrated traders too, when federal programs lapse or lack clear direction on how they will be implemented. These waiting games have pushed otherwise promising companies that lack protracted financial durability out of business or into distressed sales. Indeed, the industry continues to consolidate that defines its maturing status as much as it demonstrates the risk in government dependence.

In early November, and deep in the shadows of an extraordinarily contentious US presidential race, the US biodiesel industry awaits the finalized mandate for renewable fuel demand for 2017, and the renewal of a tax incentive to encourage blending. Even as clarity is sought on these two programs, a stream of news releases from the US Department of Justice highlights the fraud seemingly endemic in government programs, and so frequently twinned with unintended consequences.

The US Environmental Protection Agency appears to be on target in meeting its end of November deadline in issuing the volume obligation for renewable fuels under the Renewable Fuel Standard for 2017, having submitted their finalized Renewable Volume Obligation to the White House Office of Management and Budget in mid-October. OMB reviews such government diktats to ensure c...