by University of Illinois (Western Farm Press)  Beyond 2013, there are real questions about the feasibility of meeting the ever-increasing requirements of the RFS, and this concern goes beyond the well-known difficulties with meeting the mandate for cellulosic biofuels.

…There are two separate but related issues surrounding the implementation of the RFS in the near future. One is the so-called blend wall for renewable biofuels (almost entirely ethanol) and the second is the availability of advanced biofuels feedstocks. We illustrate the effect of these issues using a baseline scenario for RFS implementation.

…Before proceeding with the analysis it is important to note two further considerations. First, fuels qualifying as biodiesel can be applied toward the biodiesel, undifferentiated advanced, or the renewable mandate. This reflects the nested structure of the RFS mandates based on the contribution of different biofuels in reducing greenhouse gas emissions. (See this recent post by Nick Paulson and Seth Meyers for further details on the nested structure of the mandates.) Second, biodiesel has an ethanol equivalent of 1.5 for the purposes of RFS compliance so that a physical gallon of biodiesel counts as 1.5 gallons towards the advanced and total mandates, effectively reducing the physical gallons needed to meet the undifferentiated advanced biofuels mandate. In 2013, for example, 1.28 billion gallons of biodiesel would count as 1.92 billion gallons for meeting the advanced biofuels mandate, reducing the effective mandate for undifferentiated biofuels from 2.47 billion gallons to 830 million gallons. That mandate then could be met with an additional 553 million gallons of biodiesel (830/1.5), 830 million gallons of other advanced biofuels, or some combination of the two.

…For 2013, gasoline consumption is forecast at about 133 billion gallons, meaning that a maximum of just over 13.3 billion gallons of renewable biofuels can be blended if the vast majority of the blending is at the 10 percent level.

…The mandate for 2013 is 13.8 billion gallons, which when compared to a blend wall of 13.3 billion gallons leaves a shortfall of about 500 million gallons in the consumption of renewable biofuels. There are three possible remedies for that shortfall. First, the blend wall can be expanded by more rapid implementation of E-15 and E-85 or by increasing domestic motor gasoline consumption. Second, discretionary blending of biodiesel (blending in quantities in excess of the 1.28 billion gallon mandate) could fill the gap. In 2013, for example, an additional 333 million gallons of biodiesel would be required to make up the entire 500 million gallon shortfall in renewable biofuel blending. Third, RIN credits from previous discretionary blending of renewable biofuels (estimated at 2.5 billion gallons) could be used to make up the difference between the mandate and the blend wall.

These alternatives provide a relatively straightforward solution to the blend wall in 2013, but the blend wall becomes much more problematic in 2014 and beyond. Without an increase in gasoline consumption or an increase in consumption of E-15 and E-85, the difference between the mandate and the physical ability to blend grows from 500 million gallons in 2013 to 1.1 billion gallons in 2014 and 1.7 billion gallons in 2015. RINS credits from previous discretionary blending would likely be exhausted sometime in 2014.   READ MORE