EIA forecasts continued biomass-based diesel expansion due to final 2017 RFS targets

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On Nov 23, a U.S. Environmental Protection Agency (EPA) released a final order for a 2017 Renewable Fuel Standard (RFS) module year, with aloft targets than those essentially due in May. EPA augmenting both a modernized biofuels and sum renewable fuel targets while gripping a cellulosic biofuel and biomass-based diesel targets unchanged.

Image credit: U.S. Energy Information Administration

EIA used a 2017 RFS targets in a final order in building a U.S. biofuels foresee by 2017 for a latest Short-Term Energy Outlook (STEO). EIA expects that a order will have a biggest impact on biomass-based diesel consumption, that is foresee to continue a new expansion into 2017, while ethanol expenditure stays mostly unchanged.

Biomass-based diesel generates Renewable Identification Number (RIN) credits, that are used by refiners and importers of gasoline and diesel to accommodate a RFS targets for use of biomass-based diesel, modernized biofuels, and sum renewable fuel. Biomass-based diesel RINs, also famous as D4 RINs, are some-more profitable than D6 RINs for grain-based ethanol given their coherence in assembly mixed RFS targets.

Image credit: U.S. Energy Information Administration

Steadily augmenting RFS targets for biomass-based diesel have led to augmenting D4 RIN prices, which, along with a blender’s taxation credit, have helped inspire flourishing levels of biomass-based diesel expenditure in 2015 and 2016.

In a latest STEO, EIA forecasts that biomass-based diesel expenditure will boost from 1.7 billion gallons in 2015 to a record turn of 2.5 billion gallons in 2017, 0.5 billion gallons above a biomass-based diesel RFS aim of 2.0 billion gallons. The additional biomass-based diesel will assistance accommodate a modernized biofuel RFS target.

Ethanol is a most-consumed renewable fuel in a United States, and plays a largest purpose in correspondence with a RFS aim for sum renewable fuel. EIA assumes that ethanol expenditure will continue to be driven essentially by domestic gasoline demand. Almost all engine gasoline sole in a United States is blended with adult to 10% ethanol, though infrastructure, economic, and placement issues still extent poignant expansion in ethanol blends above 10%.

Ethanol expenditure averaged about 14.0 billion gallons in 2015, and it is foresee to normal 14.4 billion gallons in both 2016 and 2017. This turn of expenditure formula in a ethanol share of a sum gasoline pool averaging 10% in both 2016 and 2017. Any shortfalls in RFS correspondence in 2017 are approaching to be met by existent RINs in a RIN bank: a supply of RINs generated in prior years in additional of a RFS targets in those years. On Nov 23, 2016, EPA estimated that approximately 1.54 billion gallons can be used for correspondence in a eventuality of a shortfall streamer into 2017.

Source: EIA