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

The Outlook for Conventional Biofuels is Brighter Than You Think Scott I rwin University of I llinois sirwin@illinois.edu w w w .farm docdaily.illinois.edu w w w .farm doc.illinois.edu

http://www.latimes.com/opinion/editorials/la-ed-1206-epa-renewable-fuel-20151205-story.html w w w .farm docdaily.illinois.edu

U.S. Renewable Fuels Standards, 2008-2022 40 Cellulosic Biodiesel Undifferentiated Conventional 35 30 20% GHG Gallons (billion) Reduction 25 20 15 50% GHG Reduction 10 5 0 Year w w w .farm docdaily.illinois.edu

U.S. Renewable Fuels Standards after Waiving Cellulosic Volumes, 2008-2022 25 Biodiesel Undifferentiated Conventional 20 Gallons (billion) 15 10 5 0 Year w w w .farm docdaily.illinois.edu

E10 Blend Wall, 2010 - 2016 16 14.0 13.9 14 13.4 Ethanol (bil. gal.) 13.2 12.9 12.9 12.9 12 10 8 2010 2011 2012 2013 2014 2015 2016 Year w w w .farm docdaily.illinois.edu

E10 Blend Wall and RFS Statutory Conventional Mandate, 2010 - 2016 16 15.0 15.0 Blend Wall 14.4 Conventional Mandate 14.0 13.9 13.8 14 13.4 Ethanol (bil. gal.) 13.2 13.2 12.9 12.9 12.9 12.6 12.0 12 10 8 2010 2011 2012 2013 2014 2015 2016 Year w w w .farm docdaily.illinois.edu

Novem ber 2 0 1 3 : EPA’s 1 st Proposal for 2 0 1 4 RFS Standards 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” http://www.epa.gov/OTAQ/fuels/renewablefuels/documents/4 20f13048.pdf w w w .farm docdaily.illinois.edu

U.S. Renewable Fuels Standards after Waiving Cellulosic Volumes under EPA November 2013 Proposal, 2014-2022 25 Advanced Conventional Conventional Cut Gallons (billion) 20 15 13.01bg 10 5 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 Year w w w .farm docdaily.illinois.edu

U.S. Renewable Fuels Standards after Waiving Cellulosic Volumes under EPA November 2013 Proposal, 2008-2022 25 Advanced Conventional Conventional Cut Gallons (billion) 20 17.3bg total conv. cut 15 10 5 potential advanced cuts? 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 Year w w w .farm docdaily.illinois.edu

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 w w w .farm docdaily.illinois.edu

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 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” http://www.epa.gov/sites/production/files/2015-11/documents/rfs-2014- 2015-2016-annual-rule-frm.pdf w w w .farm docdaily.illinois.edu

Final Renewable Fuels Standards Volume Requirements for the U.S., 2014-2017 (billion gallons) 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. w w w .farm docdaily.illinois.edu

U.S. Renewable Fuels Standards under the EPA November 2015 Final Rules, 2014-2022 25 Advanced Conventional Conventional Cut 20 1.9bg total Gallons (billion) conv. cut 15 10 5 no advanced cuts 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 Year w w w .farm docdaily.illinois.edu

Domestic Ethanol Use under EPA November 2015 Final Rules, 2014-2022 20 Potential Conventional Mandate (E15/E85) Conventional Mandate (E10) Advanced Mandate (E10) 15 Gallons (billion) 5.8bg total E10 blend 10 wall 5 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 Year w w w .farm docdaily.illinois.edu

Corn for Domestic Ethanol Use under EPA November 2015 Final Rules, 2014-2022* 7 Potential Conventional Mandate (E15/E85) Conventional Mandate (E10) 6 Bushels (billion) 2.1bb total 5 4 3 2 1 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 Year *no adjustment for co- product production w w w .farm docdaily.illinois.edu

Weekly (Thursday) Ratio of Wholesale Ethanol to CBOB Gasoline Price at Chicago, 01/25/2007 - 12/03/2015 2.25 2.00 1.75 Ratio 1.50 1.25 1.00 0.75 0.50 Date Source: OPIS w w w .farm docdaily.illinois.edu

Domestic Biodiesel Use (physical gallons) under EPA November 2015 Final Rules, 2014-2022 5 Biodiesel Mandate Potential Advanced Mandate Potential Conventional Mandate 4 Gallons (billion) 3 2 1 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 Year w w w .farm docdaily.illinois.edu

Fats and Oil Use for Domestic Biodiesel under EPA November 2015 Final Rules, 2014-2022 35 Biodiesel Mandate Potential Advanced Mandate 30 Potential Renewable Mandate Pounds (billion) 25 20 15 10 5 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 Year w w w .farm docdaily.illinois.edu

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 w w w .farm docdaily.illinois.edu