With 1.8 billion gallons of biodiesel capacity currently registered with the EPA, there is more than enough capacity to supply Renewable Identification Number credits (RINs)* required by the Renewable Fuel Standard 2, said Gary Haer, vice president, sales and marketing, Renewable Energy Group, this week. Moreover, blenders are increasingly able to produce large volumes of biodiesel/diesel blends at good economic value. A blend of different feedstocks often delivers better economics than a single feedstock, Haer said in a Webinar on RFS2 Implementation hosted by Hart Energy Conferences.
Blenders currently have a variety of feedstocks from which to choose, including soybean oil, annual cover crop oil, algal oil, waste oil or grease, non-food corn oil and canola oil. Sourcing different feedstocks helps blenders better manage risks and assure consistent supply. Feedstock blending also produces potentially higher quality than single feedstock biodiesel. Haer used Chart 1 to show the different cetane and cloud point levels achieved by single feedstocks and a blend.
Chart 1: Renewable Energy Group
While the biodiesel industry has been unsuccessful at getting Congress to reinstate the Biodiesel Tax Credit, there may be an opportunity to do so after next month’s mid-term elections. However, the values that biodiesel producers are receiving now for RINs have almost replaced the value of the tax credit. Producers receive one and one-half RINs per biodiesel gallon. Last week, RINs were valued at between $.55 and $.60 or $.825 to $.90 per gallon.
Moving forward, there are several state and provincial incentives for biodiesel producers, which could boost demand for biodiesel now and in the future (as shown in Chart 2).
* The National Biodiesel Board has defined RIN as the basic currency for the Renewable Fuel Standard program for credits trading, and use by obligated parties, such as oil blenders, and renewable fuel exporters to demonstrate compliance. RINS also help track the volumes of renewable fuels.
Chart 2: U.S. Department of Energy