The company, a subsidiary of the oil and gas giant Chevron, announced the closure last week. Chevron Renewable Energy General Manager of Corporate affairs Neville Fernandes confirmed to 27 News that all 26 employees at the plant will either be offered positions elsewhere in the company or receive severance packages. The company does not expect the plant to close for several months as the workers undertake the work to shutdown operations in a manner in keeping with regulations. Fernandes said that biodiesel market forces prompted corporate leadership to close the plant.
DEFOREST, Wis. (WKOW) – Twenty-six people will either be displaced or laid off in the coming months as Chevron Renewable Energy Group shutters its DeForest biodiesel plant.
The company, a subsidiary of the oil and gas giant Chevron, announced the closure last week.
Chevron Renewable Energy General Manager of Corporate affairs Neville Fernandes confirmed to 27 News that all 26 employees at the plant will either be offered positions elsewhere in the company or receive severance packages.
The company does not expect the plant to close for several months as the workers undertake the work to shutdown operations in a manner in keeping with regulations.
Fernandes said that biodiesel market forces prompted corporate leadership to close the plant.
And the market, according to the Chevron Renewable Energy higher up, is responding to regulatory action from the Environmental Protection Agency (EPA).
The federal regulator sets targets for biofuel use in the US, including biodiesel. It most recently set targets in June of last year for 2023, 2024 and 2025.
“Those numbers were set very low,” Fernandes said. “In fact, they were set under 3 billion gallons (for 2023), when the total amount of biodiesel and renewable diesel that was consumed in the US in 2023, was over 4 billion gallons.”
He went on to claim that the difference between the EPA’s target and market demand “causes an imbalance” in Renewable Identification Number credits. The agency uses the credits as a method to track how much biofuel is produced. Corporations like Chevron Renewable Energy buy and sell credits to ensure they are producing an appropriate amount of biofuel.
After the EPA set the targets last year, the price of credits tumbled, losing a third of their value between Sept. 1 and Oct. 16.
The US Energy Information Administration attributed the drop to the EPA’s actions and biofuel production costs.
“And that led to these market conditions, which are adversarial to [producing] biodiesel, specifically at our Madison facility,” Fernandes said.
27 News reached out to the EPA for comment, but the agency did not respond.
In setting the 2023-25 target, the EPA wrote on its website that it cannot only consider market conditions.
“When determining biofuel volumes for years after 2022, EPA must consider a variety of factors specified in the statute, including costs, air quality, climate change, implementation of the program to date, energy security, infrastructure issues, commodity prices, water quality, and supply,” the agency said.
The shuttering of the DeForest plant comes at a time when the world needs to embrace renewable fuels like biodiesel.
Biofuels are generally recognized to have a smaller carbon impact on climate as compared to fossil fuels because the crops used to make the fuels absorb some of the carbon produced when they are burned.
Biofuel demand has risen consistently in the US, and will likely continue to do so.
In its Renewables 2023 report, the International Energy Agency predicted that by 2028 the US will consume roughly 1.13 billion gallons more of biofuels than it did in 2022.
The economic impacts of plants like the one closing in DeForest have ripple effects across the economy.
On Friday, the US Department of Agriculture (USDA) celebrated “National Biobased Products Day.”
A report from the agricultural regulator says the industry contributes $89 billion to the US economy and employs nearly 4 million people.
Biorefining, like that done at the DeForest plant, provides jobs to 13,025 people and is a $1.6 billion industry, according to the USDA report.
The DeForest plant turned Wisconsin grown soybeans into biodiesel. Its loss prompted lamentations from representatives of local farmers.
“With crop prices dropping and input costs stubbornly high, this news is unwelcomed and disheartening for our farmers,” Wisconsin Soybean Association President Sara Stelter said in a written statement. “We recognize that this is a complex situation, but the pause on production in these plants is more stark evidence that Wisconsin’s legislative leaders should look at how neighboring states have supported legislation that uplifts the biofuels industry – rather than hurting producers.”
The search for support at the state level was echoed by Fernandes. He said Wisconsin should aspire to emulate the complex low-carbon fuel standards implemented by California, Oregon and Washington.
In the short-term, the state could take more simple steps like tax incentives for consumers to choose biodiesel.
“Biodiesel is a great low carbon fuel,” Fernandes said. “It has benefits of lower carbon, reduced tailpipe emissions, it supports agriculture, it supports local economies, we need supportive policy to encourage the production and the use of biodiesel.”
GIPHY App Key not set. Please check settings