As EPA unveils ethanol quotas, niche RINs market revives

29 May 2015 | Author: | No comments yet »

EPA Cuts Mandates for Ethanol With Overdue Renewables Quota.

WASHINGTON (AP) — The Obama administration is proposing to reduce the amount of ethanol blended in the nation’s gasoline, a blow to renewable fuel companies that have pushed to keep high volumes of their product flowing into drivers’ gas tanks. The US Environmental Protection Agency on Friday proposed cutting the quotas for the use of renewable fuels, lowering the mandate for corn ethanol this year and next from the 15 billion gallons required by law. EPA released its much-anticipated proposed volume requirements for the renewable fuel standard (RFS) May 29, which, unlike its volume proposal issued in late 2013, set out a trajectory of growth for both biomass-based diesel and advanced biofuel categories. The proposal calls for 1.63 billion gallons of biomass-based diesel for 2014, 1.7 billion gallons for 2015, 1.8 billion gallons for 2016 and 1.9 billion gallons for 2017. Ethanol and oil industry advocates have battled over whether targets in the 2007 Energy Independence and Security Act are obsolete because gasoline demand has grown more slowly than forecast.

The value of ethanol RINs for 2015 plunged 19 percent to 48 cents Friday, according to StarFuels Inc., a Jupiter, Florida-based alternative energy broker. The EPA is scheduled to issue renewable fuel quotas for 2014, 2015 and 2016 before June 1, and the two people said that announcement will also come Friday. Mosali says the lack of any biodiesel volume proposals over the past two years has been extremely difficult for his business. “There’s been nothing out there to start with,” he says. “Now at least we have something to work off of.

Hudak said that industry has created and supported more than 25,000 Indiana jobs and a multibillion dollar state industry that could be harmed depending on the EPA’s actions. The EPA abandoned its proposal for quotas last year, after ethanol makers bristled at the attempt to cut quotas based on the argument that more than 10 percent ethanol couldn’t be absorbed by the domestic market. The uncertainty was just too much, so this is a huge positive.” The American Soybean Association says the proposed volumes do not fully recognize or capitalize on the capacity and further growth potential of U.S. biodiesel. Separately, production of cellulosic ethanol — a fuel made from wood, grass and other plant material — is far below the 3 billion gallons set in the legislation for this year.

Taken together EPA will have to propose some cuts, analysts say. “The statutory volume targets of the RFS are now totally implausible, so something has to give,” Jeremy Martin, a senior scientist the Union of Concerned Scientists, wrote in a report released Thursday. “Whatever they do will likely be challenged in court, so the final answer to these questions may take some time to shake out.” In Iowa, Quad County is holding more than $800,000 of cellulosic credits tied to the more than 1 million gallons it has made, in the hope refiners will eventually need them and buy them.

Dan Coats and Joe Donnelly, recently sent the EPA a letter supporting the federal requirement that resulted in about 10 percent of fuel in the U.S. containing ethanol last year. “Biofuels like ethanol are renewable domestic energy sources, create more economic opportunities, and give consumers more options at the gas pump,” Donnelly said in a statement. Patrick Pfingsten, a spokesman for the Indiana Corn Marketing Council, said the group represents thousands of Indiana grain farmers who sell their corn to the state’s 14 ethanol plants, which turn that grain into the fuel.

If the EPA lowers the ethanol requirement, he said that “will mean not only hardship for corn farmers but it will also have a chilling effect on the future of biofuels in the state.” Ted McKinney, the director of the Indiana State Department of Agriculture, said the ethanol industry is “a bona fide way” to boost Indiana’s rural communities because the overall renewable fuels industry is likely to grow in the decades ahead.

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