The Outlook for Conventional Biofuels is Brighter Than You Think - - PowerPoint PPT Presentation

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The Outlook for Conventional Biofuels is Brighter Than You Think

Scott I rwin University of I llinois sirwin@illinois.edu

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http://www.latimes.com/opinion/editorials/la-ed-1206-epa-renewable-fuel-20151205-story.html

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5 10 15 20 25 30 35 40 Gallons (billion) Year

U.S. Renewable Fuels Standards, 2008-2022

Cellulosic Biodiesel Undifferentiated Conventional

20% GHG Reduction 50% GHG Reduction

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5 10 15 20 25 Gallons (billion) Year

U.S. Renewable Fuels Standards after Waiving Cellulosic Volumes, 2008-2022

Biodiesel Undifferentiated Conventional

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12.9 12.9 12.9 13.2 13.4 13.9 14.0 8 10 12 14 16 2010 2011 2012 2013 2014 2015 2016 Ethanol (bil. gal.) Year

E10 Blend Wall, 2010 - 2016

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12.9 12.9 12.9 13.2 13.4 13.9 14.0 12.0 12.6 13.2 13.8 14.4 15.0 15.0 8 10 12 14 16 2010 2011 2012 2013 2014 2015 2016 Ethanol (bil. gal.) Year

E10 Blend Wall and RFS Statutory Conventional Mandate, 2010 - 2016

Blend Wall Conventional Mandate

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E1 0 blend w all challenges drove EPA policy shift: “The proposal seeks to put the RFS program on a steady path forw ard - ensuring the continued grow th of renew able fuels w hile recognizing the practical lim its on ethanol blending, called the ethanol "blend w all.” Novel legal argum ent for renew able m andate w rite dow n: “inadequate dom estic supply”

Novem ber 2 0 1 3 : EPA’s 1 st Proposal for 2 0 1 4 RFS Standards

http://www.epa.gov/OTAQ/fuels/renewablefuels/documents/4 20f13048.pdf

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5 10 15 20 25 2014 2015 2016 2017 2018 2019 2020 2021 2022 Gallons (billion) Year

U.S. Renewable Fuels Standards after Waiving Cellulosic Volumes under EPA November 2013 Proposal, 2014-2022

Advanced Conventional Conventional Cut

13.01bg

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5 10 15 20 25 2014 2015 2016 2017 2018 2019 2020 2021 2022 Gallons (billion) Year

U.S. Renewable Fuels Standards after Waiving Cellulosic Volumes under EPA November 2013 Proposal, 2008-2022

Advanced Conventional Conventional Cut

potential advanced cuts? 17.3bg total

• conv. cut

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EPA Proposed 2 0 1 4 RVOs

w w w .farm docdaily.illinois.edu OPI S biofuels new s service reported on February 2 5 , 2 0 1 4 : Senator Charles Grassley of I ow a last w eek told reporters, "I w ould doubt there w ould be a com plete reversal [ from the proposal] , w hich is w hat I w ould like to happen. I 'd be surprised if there w asn't som e m odification of the original rule that still m ight be considered a partial victory for ethanol."

http://thegazette.com/wp-content/uploads/2011/08/grassley485.jpg

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E1 0 blend w all challenges still driving EPA policy shift: “…re

realw orl rld cons nst raint nt s, suc uch h as t he he slow er t han expect ct ed developm ent of t he cellulosic biofuel indust ry ry and const ra raint s in t he m arket place ce needed t o supply ce cert ain biofuels t o co consum ers, have m ade t he t im eline laid out by Congre ress im possible t o achieve.”

Novel legal argum ent for renew able m andate w rite dow n still used: “inadequate dom estic supply”

Novem ber 2 0 1 5 : EPA’s Final Rules for 2 0 1 4 , 2 0 1 5 & 2 0 1 6 RFS Standards

http://www.epa.gov/sites/production/files/2015-11/documents/rfs-2014- 2015-2016-annual-rule-frm.pdf

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Category 2014 2015 2016 2017 Cellulosic Biofuel 0.033 0.123 0.230 NA Biomass-Based Diesel 1.63 1.73 1.90 2.00 Advanced Biofuel 2.67 2.88 3.61 NA Total 16.28 16.93 18.11 NA Implied Conventional 13.61 14.05 14.50 NA Note: These volumes are stated in billion gallons of ethanol equivalents, except for biomass-based diesel which is stated in billion gallons of "wet" physical volume terms. NA stands for not applicable. Final Renewable Fuels Standards Volume Requirements for the U.S., 2014-2017 (billion gallons)

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5 10 15 20 25 2014 2015 2016 2017 2018 2019 2020 2021 2022 Gallons (billion) Year

U.S. Renewable Fuels Standards under the EPA November 2015 Final Rules, 2014-2022

Advanced Conventional Conventional Cut

1.9bg total

• conv. cut

no advanced cuts

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5 10 15 20 2014 2015 2016 2017 2018 2019 2020 2021 2022 Gallons (billion) Year

Domestic Ethanol Use under EPA November 2015 Final Rules, 2014-2022

Potential Conventional Mandate (E15/E85) Conventional Mandate (E10) Advanced Mandate (E10)

5.8bg total E10 blend wall

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1 2 3 4 5 6 7 2014 2015 2016 2017 2018 2019 2020 2021 2022 Bushels (billion) Year

Corn for Domestic Ethanol Use under EPA November 2015 Final Rules, 2014-2022*

Potential Conventional Mandate (E15/E85) Conventional Mandate (E10)

2.1bb total *no adjustment for co- product production

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0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25 Ratio Date

Weekly (Thursday) Ratio of Wholesale Ethanol to CBOB Gasoline Price at Chicago, 01/25/2007 - 12/03/2015

Source: OPIS

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1 2 3 4 5 2014 2015 2016 2017 2018 2019 2020 2021 2022 Gallons (billion) Year

Domestic Biodiesel Use (physical gallons) under EPA November 2015 Final Rules, 2014-2022

Biodiesel Mandate Potential Advanced Mandate Potential Conventional Mandate

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5 10 15 20 25 30 35 2014 2015 2016 2017 2018 2019 2020 2021 2022 Pounds (billion) Year

Fats and Oil Use for Domestic Biodiesel under EPA November 2015 Final Rules, 2014-2022

Biodiesel Mandate Potential Advanced Mandate Potential Renewable Mandate

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Sum m ary

• 1. Latest RFS rules from the EPA

represent a major win for ag and conventional biofuels

• 2. Modest increase in ethanol use, but

a very high safety net

• 3. Large increases in biodiesel and

renewable diesel on the horizon