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Call to Action for a Truly Sustainable Renewable Future
August 8, 2013 – 5:07 pm | No Comment

-Include high octane/high ethanol Regular Grade fuel in EPA Tier 3 regulations.
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“The Myth of High RIN Prices As Proof of the Blend Wall”: New Report

Submitted by on October 4, 2016 – 10:37 amNo Comment

by Jim Lane (Biofuels Digest)  In Washington, the Biotechnology Innovation Organization released the new white paper, “The Myth of High RIN Prices As Proof of the Blend Wall,” analyzing data recently released by EPA on compliance with the Renewable Fuel Standard between 2010 and 2013 (the latest year for which compliance is complete). The newly available data challenge the widely accepted assumption that the blend wall – the point at which ethanol blending in gasoline exceeds 10 percent – caused the 2013 spike in Renewable Identification Number (RIN) spot market prices.  Download the Report here.  READ MORE

 

Excerpts from the report:  The blend wall is a theoretical 10 percent limit on the amount of ethanol that can be blended into gasoline in the United States, due to infrastructure and market constraints. The 36 billion gallon volume set by Congress was projected to be 20 percent of transportation fuel use by 2022, indicating that the blend wall would have to be passed at some point.

… the blend wall was reached as early as 2010 and was definitely breached by 2012. Nonetheless, during those years conventional RIN prices remained low and obligated parties continued to accumulate excess RINs to carry over for future compliance years.

The 2013 price spikes in spot market RIN trading cannot be explained as a consequence of the blend wall, since they are not connected to a demonstrable increase in difficulty for obligated parties to meet annual RFS obligations.

A more accurate approximation can be obtained by looking at EPA data on the annual generation of RINs by type of biofuel produced.11 This data shows that not all D6 RINs represent ethanol; in 2013, nearly 2 percent of D6 RINs were assigned to biomass-based diesel or other fuels. And not all D5 RINs represent ethanol; in 2010, nearly 86 percent of D5 RINs generated were for biomass-based diesel.

The amount of ethanol that obligated parties were therefore required to blend into the gasoline they produced was already at 10 percent (or slightly above) as of 2010.   …   By 2012, the requirement was at 11.8 percent. Further, the “ethanol gap” was no more difficult for obligated parties to meet in 2013 than in 2012 – the relative percentages are nearly identical. The data undermine the theory that the blend wall was the cause of RIN price spikes in 2013.

EPA has again proposed to provide unwarranted relief from the blend wall to obligated parties in the 2017 RVOs.18 EPA should reconsider this course of action in light of data disproving the relationship between high RIN prices and the blend wall.   READ MORE

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