SLIDE 1
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Overview of the RFS Program
- History
- RFS2 Mandates
- Renewable Fuel Production
- RINs
- Renewable Volume Obligations
- Intended/Unintended consequences
- Outlook/Issues
Cowen and Company Renewable Fuels Summit What is RFS2: A Primer June - - PowerPoint PPT Presentation
Cowen and Company Renewable Fuels Summit What is RFS2: A Primer June - - PowerPoint PPT Presentation
Cowen and Company Renewable Fuels Summit What is RFS2: A Primer June 3, 2013 New York, NY Sandra Dunphy Director, Energy Compliance Weaver and Tidwell, L.L.P. 0 Overview of the RFS Program History RFS2 Mandates Renewable Fuel
SLIDE 2
SLIDE 3
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History of RFS2
- August 2005: Energy Policy Act of 2005 enacted
– Established use of 7.5 BG of renewable fuels (RF) by 2012
- 2006 volume handled through “collective” compliance approach
– Goals of program:
- Energy security; economic benefits – jobs; air quality benefits
- Sep 1, 2007: RFS1 regulatory program begins
– Compliance and trading program based on a Renewable Identification Number (“RIN”), i.e. credit – Obligations are based on gasoline production
- Dec 19, 2007: Energy Independence and Security Act (EISA)
– Requires 36 BG of renewable fuel made from “renewable biomass” by 2022
- 4 “nested” volume mandates: RF, Advanced Biofuel (AB), Biomass‐based Diesel
(BBD) and Cellulosic Biofuel (CB)
- February 3, 2010: EPA signs final rule to implement RFS2
– Effective July 1, 2010 (except for Renewable Volume Obligation calculations – Renewable fuel feedstock focus now switches to “renewable biomass” – Implements cellulosic biofuels and biodiesel requirement – Obligations are now based on gasoline AND diesel fuel production
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RFS2 Renewable Fuel Volumes
5 10 15 20 25 30 35 40
Year Billion Gallons
Advanced Biofuel: Unspecified Advanced Biofuel: Biomass-Based Diesel Advanced Biofuel: Cellulosic Biofuel Conventional Biofuel (corn ethanol)
CORN ETHANOL CAPPED AT 15 BG/YR
E‐10 E‐15 E~30
GHG Reduction 50% 60% 20%
Gas MPG: + 22.4%; Gas + Diesel Demand: ‐ 17.5%
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Feedstock = Renewable Biomass
- “Renewable biomass” –– definition includes:
– products from planted crops and crop residue
- Corn, soybeans, canola, switchgrass
– planted trees and tree residue
- Slash, pre-commercial thinnings
– animal waste material and byproducts
- Tallow, chicken fat, manure
– algae – biomass cleared from the vicinity of buildings and other areas to reduce the risk of wildfire – separated yard or food waste
- Use cooking oil, trap grease, post-consumer food wastes
– must come from land cleared or cultivated prior to 12/19/2007
- In 2012, ~40% of the US corn crop was used to produce ethanol
- In 2012, ~21% of US soybean oil production was used to produce
biodiesel
SLIDE 6
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Renewable Fuel Production
EPA‐Registered Renewable Fuel Production Facilities
* Imports to the US in 2012
Plants Prod Cap. (BG) Plants Prod Cap. (BG) Plants Prod Cap. (BG) Ethanol 139 7.8 200 13 214 15.0 Sugarcane Eth 192 .660* BBD ‐ US 30 0.5 39 0.864 216 2.6 BBD ‐ Foreign 32 1.2
- Renew. Dies. ‐ US
2 ~0 2 ~0 12 0.17
- Renew. Dies. ‐ For.
3 0.5 Cellulosic 1 ~0 1 ~0 8 0.02 Jul‐10 May‐13 Sep‐07
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OPIS Average RIN Prices 2011 ‐ 2013
0.0000 0.2000 0.4000 0.6000 0.8000 1.0000 1.2000 1.4000 1.6000 1.8000 2.0000
Price per Gallon
Average RIN Prices per gallon ‐ D4, D5, D6 RINs
D4 2011 D4 2012 D4 2013 D5 2011 D5 2012 D5 2013 D6 2011 D6 2012 D6 2013
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The life of a 2013 RIN
RIN is generated RIN is transferred RIN is received by Blender blends Blender sells Obligated Party at Renewable Fuel with a sale of Renewable Fuel renewable fuel + separated RINs to uses RINs for Production Facility Renewable Fuel Purchaser/ Blender petro fuel to produce Obligated Party annual compliance a transportation fuel; RIN separation
- ccurs
OR 5/22/2013 6/22/2013 6/22/2013 7/1/2013 9/30/2013 2/28/2014 OR 2/28/2015
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RFS2 Nested RVO Concept – using Cellulosic RINs
(Circle size not proportionate)
Total Renewable (RF) D3, D4, D5, D6, D7
Total Advanced Biofuels (AB) D3, D4, D5, D7
Cellulosic Biofuel Waiver Credit*: (CWC) Biomass-Based Diesel (BBD) D4
* EPA Cellulosic Waiver Credits cannot be applied to AB or RF RVOs
D7
Cellulosic (CB)
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Renewable Volume Obligations (RVOs)
- RVO percentages are set by EPA each year by Nov 30 (in theory)
- RVO % = EISA annual volume for a given D Code category
Gasoline + Diesel projected to be used in coming year
- Standards for
2013(prop) 2014 (est) – Cellulosic biofuel 0.008% 0.01% – Biomass‐based diesel 1.12% 1.50% – Advanced biofuel 1.60% 2.77% – Renewable fuel 9.63% 10.56%
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RVO Costs
2012 2013 RINs at $2 ea RINs at $3 ea Average RIN cost/gallon gas or diesel $0.0167 $0.0900 $0.1920 $0.2889 Gas + Diesel Production (BG) 180 171.88 171.88 171.88 Cost ($B) 3.01 15.47 33.00 49.66
Assumes all RINs purchased as of 5/1
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RINs Supply and Demand 2012-2014 (excl exports)
Fuel Cate‐ gory
2012 Production and Imports 2012 Carry‐
- ver
20% of 2013 mandate 2013 RINs Needed For 2013
- Est. 2013
Produc‐ tion 2013 Est Carry‐
- ver
20% of 2014 mandate 2014 RINs Needed For 2014 Est. 2014 Produc‐ tion 2014 Est Carry‐
- ver
Corn Ethanol (D6)
12.98 B 2.028 B 2.67 B 11.8 B 13.0 B 1.2 B 2.88 B 13.0 B 13.2 B 0.2 B
Non‐ cellie ethanol, etc (D5)
606 M 154 M 166 M 672 M 650 M 0 M 270 M 1.77 B 700 M ‐1.07 B
Bio‐ diesel Renew. diesel (D4)
1.73 B 300 M 384 M 1.62 B 1.92 B 300 M 480 M 1.98 B 2.25 B 0.27M
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Intended/Unintended Consequences
- Blend Wall
- More focus on advanced biofuels
- More interest in “drop‐in” renewable fuels
- Foreign involvement – producers and feedstock
suppliers
- Dependency on foreign renewable fuel producers –
sugarcane ethanol
- Increases in exports of gasoline, diesel
- Employment in rural America
- Need for many cellulosic production facilities in US
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Outlook and Issues
- New EPA Administrator
- Blend Wall concerns
- 2013 Standards
- 2014 Standards
- Quality Assurance Plans
- New RIN trading platforms
- New renewable fuel pathways and feedstocks
- Need for cellulosic fuels
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