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Now we wait… For farmers across America, crushing facilities, biodiesel production refineries, commodity trading desks, petroleum terminals and bulk plants, petroleum distributors, transport fleets, oil heat consumers and many other related biodiesel market segments, we find ourselves in stand-by mode. We are collectively waiting on the possibility of the reauthorization of the biodiesel tax credit and hopefully a revised Renewable Fuels Standard — Renewable Volume Obligation in 2014. In short, all of these respective biodiesel stakeholders must all try and rationalize where we go from here. As a veteran of biodiesel marketing and distribution over the past decade, my first suggestion for the current state of the biodiesel industry is to "get back on message." Looking forward as we move into 2014, biodiesel indus- try stakeholders must once again consider a recalibration of their respective business plans. The mighty volume gains the biodiesel industry enjoyed in 2013 were driven by a conflu- ence of market events, such as the full year's implementation of the biodiesel blenders tax credit, an overall year of D4 RINs (bio-based diesel renewable identification numbers) strength; a very favorable HOBO (heating oil bean oil) spread; and per- haps, most importantly, a pricing discount to diesel fuel and heating oil. Enter an uncertain 2014: The biodiesel industry is a market that currently has a static RVO obligation at 1.28 bil- lion gallons, causing uncertainty in the RINs markets and the added questions regarding the reinstatement of the biodiesel tax credit. The hard reality is any negative news on any one of these fronts could affect the biodiesel market balance very quickly, thus reversing the value of discretionary blending of biodiesel into the downstream distillate markets. The arbitrage opportunities for discretionary biodiesel blending were never more on display then in 2013. As we take a step back and evaluate the industry growth in 2013, biodiesel monthly production figures show a current pro- duction capacity of two billion plus gallons per year. While this new benchmark is certainly worth noting, is this growth in production capacity sustainable without the discretionary blending opportunities downstream? Discretionary biodiesel blending has grown steadily over the past 10 years. Initially a significant barrier for growth was petroleum marketers gaining confidence in the opera- tional quality of biodiesel as a drop-in fuel. As downstream markets gained confidence in biodiesel, many users noticed performance enhancements. Over more recent years, as the industry began to demonstrate more favorable blending economics, the marketing message moved from the added value of the biodiesel gallon to simply marketing the price per gallon. Look, we are all pragmatists; it's very easy to punt the talking points out the door and cut to the chase when biodiesel has a better cost basis. From 2011-2013 the biodiesel industry has seen the growth in discretionary biodiesel blend- ing by an increased number of petroleum marketers if for no other reason, I would argue, but to gain an advantage and act as a margin maker. Truth be told, the successful biodiesel marketers recognize that growing the business model over the long haul requires not only marketing the benefits, but embracing the added-value throughout the company and customer relationship. Over the past 10 years the growth of the biodiesel industry has been nothing short of dramatic. Those brave visionary diesel distributors and heating oil entrepreneurs each saw a great story through the practice of blending biodiesel into distillate fuels. For almost all of the early adopters, the great- est benefits and best opportunities came with a new market- ing story. Biodiesel marketing provided a new branding opportunity for these downstream marketers, turning the business model of your grandfather's oil distributor, into an innovative 21st Century, renewable fuels marketer. It had been a rare occurrence to step out and recreate the business model for petroleum marketers, and biodiesel provided just that opportunity and still does. The message was and still is broad, positive and provides added value within the biodiesel gallon, building or re- enforcing the relationship between the distributor and the 20 APRIL 2014 | FUEL OIL NEWS | www.fueloilnews.com By Michael Devine, aMeRigReen eneRgy Biodiesel's added value Facing Current Challenges, It's Time to Get Back on Message Amerigreen Energy FUELS