Freeze It – A Proposal for Implementing RFS2 through 2015
by Scott Irwin and Darrel Good (FarmDocDaily) …Here, we present a proposal for implementing the RFS2 through 2015 that recognizes the constraints implied by the E10 blend wall and will avert the impact of the issues identified in the previous analysis. We believe the proposal is realistic because it balances the competing interests of various parties in the policy process and allows some additional time for regulators, legislators, and industry participants to consider any adjustments to RFS2 that might be needed in the longer-run. Our proposal is to simply cap or “freeze” the advanced biofuels and total mandates for 2014 and 2015 at the 2013 level of 2.75 billion gallons for advanced biofuels and 16.55 billion gallons for all biofuels. The RFS2 currently requires 3.75 billion gallons of advanced biofuels in 2014 and 5.5 billion gallons in 2015. The mandates are for 18.15 billion gallons of all biofuels in 2014 and 20.5 billion gallons in 2015.
Tables 1 through 7 are similar to the tables included in our previous analysis and trace through the implications of this proposal, with one change in the assumptions compared to our previous analysis. Due to the re-instatement of the biodiesel tax credit of $1 per gallon (and assuming the tax credit is extended to 2014 and 2015), the analysis here assumes that imported Brazilian sugarcane ethanol will have an economic disadvantage to biomass-based biodiesel in meeting the undifferentiated advanced biofuels requirements. As a result, annual ethanol imports are assumed to be 200 million gallons rather than 500 million gallons assumed in the previous analysis.
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The results of the analysis of this proposal differ from the results of the previous analysis of full implementation of RFS2 through 2015 as follows:
- Annual domestic ethanol production is 300 million gallons larger as a result of smaller Brazilian sugarcane ethanol imports,
- Annual corn consumption for domestic ethanol production is 190 million bushels larger,
- D6 RINs stocks are sufficient to fill the difference between the ethanol blend wall and the mandate for renewable biofuels through 2015,
- Domestic biomass-based biodiesel requirements are reduced from 2.57 billion gallons to 1.7 billion gallons in 2014 and from 4.73 billion gallons to 1.7 billion gallons in 2014, and
- Biomass-based feedstock requirements are reduced from 19.3 to 12.8 billion pounds in 2013 and from 35.5 to 12.8 billion pounds in 2014. READ MORE