The Renewable Fuels Monthly Report is now being produced as a partnership between the Agricultural Marketing Resource Center operated by the Value Added Agriculture Program at Iowa State Extension and Outreach (ISUEO), the Iowa Grain Quality Initiative (IGQI), an ISUEO program directed specifically at grain processing and handling, and is authored by Decision Innovation Solutions, LLC, an economic research and analysis firm located in Urbandale, Iowa.
In this our first article on Renewable Identification Numbers, or RINs, which are tradeable electronic certificates for complying with the Renewable Fuel Standard (RFS), we provide a timely update on U.S. biomass-based diesel (BBD) production in 2016 as well as an introduction to the biomass-based RINs. Look for updates on all of the four nested categories (i.e., total renewable, advanced, cellulosic, and BBD) in the renewable fuels’ RINs market in future issues.
The Renewable Fuel Standard under the Energy Independence and Security Act (EISA) stipulates that each year the Environmental Protection Agency (EPA) is required to release a proposed and final rule specifying the mandates for the next compliance year. The EPA submitted its proposal for the 2017 RFS to the White House Office of Management and Budget on April 15, 2016. This proposal contains renewable volume obligations (RVOs) for renewable fuel, advanced biofuel, and cellulosic biofuel. Also, this proposal rule includes the volumetric requirement for BBD for 2018. The EPA ruling issued on November 30, 2015, contained RVOs for renewable fuel, advanced biofuel, and cellulosic biofuel only up to 2016 and the 2017 RVO for biomass-based diesel. The volumetric requirement for BBD is set at 1.9 billion gallons for 2016 and 2.0 billion gallons for 2017. We can now expect that EPA is on track to issue its final rulemaking for the 2017 RFS mandate by November 30, 2016, which is the statutory deadline. But EPA has missed the deadline repeatedly in the recent past. Whether the EPA will increase the BBD volume obligation of 2.0 billion gallons in 2017 to above 2.0 billion into 2018 is yet to be seen.
Concerns over climate change have encouraged policies that intend to reduce greenhouse gas (GHG) emissions. An example of such a policy is the California Low Carbon Fuel Standard (LCFS), which was approved in 2009 and is administered by the California Air Resources Board (CARB). LCFS requires ongoing reductions in carbon intensities (CI) for transportation fuels sold in California. The policy aims at a 10% decline in CI by 2020 (from petroleum refiners and other fuel providers). A regulated party must meet the average CI requirements as specified in Table 1 and Table 2 for its transportation gasoline and diesel fuel, correspondingly, in each year.
LCFS uses a market-based approach to reduce GHG emissions from petroleum-based transportation fuels like reformulated gasoline and diesel. Companies can earn LFCS credits using several approaches, including improving their processes or incorporating renewable feedstocks and inputs. To be deemed a suitable alternative, the relative CI of alternative fuels have to be considered, as not all alternative fuels are estimated to have the same level of CI.
The governor of the state of California intends to reduce greenhouse gases by cutting down petroleum use by 50% by 2030. The California Air Resources Board (CARB) has established a path toward meeting this goal by at least doubling use of alternative fuels like ethanol/biodiesel, electricity, natural gas, and hydrogen.
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