U.S. biodiesel prolongation still augmenting notwithstanding death of taxation credit

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Through a initial 9 months of 2017, U.S. biodiesel prolongation levels were somewhat aloft than 2016 levels, notwithstanding a death of a sovereign biodiesel blender’s taxation credit during a finish of 2016. Domestic biodiesel prolongation competence continue to boost given of changes to import policies such as those recently announced by a U.S. Department of Commerce on biodiesel imports from Argentina and Indonesia.

Illustration by U.S. Energy Information Administration.

Biodiesel prolongation increasing over time mostly given of state and sovereign incentives. The sovereign biodiesel blender’s taxation credit, valued during $1 per gallon (gal), lapsed several times before to 2016, many recently during a finish of 2014. In those progressing years, Congress eventually voted to return a taxation credit retroactively.

Biodiesel qualifies as an modernized biofuel as partial of a Renewable Fuel Standard (RFS), a module implemented by a U.S. Environmental Protection Agency (EPA) to foster a union of biofuels into a nation’s fuel supply. To denote correspondence with a RFS, refiners and importers of petroleum products contingency possibly mix modernized biofuels such as biodiesel or buy credits called renewable marker numbers (RINs).

Biodiesel is mostly sum with petroleum diesel in blends trimming from 5% to 20% biodiesel. On average, biodiesel accounted for about 4% of sum diesel expenditure in 2016. Similar to corn ethanol, biodiesel prolongation is strong in a Midwest and delivered by rail and lorry opposite a country.

Since 2014, foreign biodiesel imports—primarily from Argentina and Indonesia—have increased in a East Coast and Gulf Coast regions. In 2016, biodiesel imports from Argentina reached 449 million gallons and accounted for scarcely 20% of U.S. biodiesel consumption.

However, in Apr 2017, a U.S. Department of Commerce (DOC) instituted two investigations into either biodiesel imports from Argentina and Indonesia put U.S. biodiesel producers during a disadvantage. The dual investigations have focused on countervailing duties—when a unfamiliar supervision provides subsidies for a prolongation of a product—and antidumping—when a unfamiliar supervision sells a product during reduction than a satisfactory value.

In November, a DOC released an affirmative final determination on countervailing duties for Argentina and Indonesia, assigning rates trimming from 34% to 72%, formed on a writer or importer of biodiesel. The U.S. International Trade Commission reached a similar finding in December, permitting for DOC to emanate final countervailing avocation orders.

Depending on a outcome of a antidumping investigation, a sum outcome of a final orders competence some-more than double a cost of biodiesel from these dual countries.

Illustration by U.S. Energy Information Administration.

In response to a investigations, new U.S. contracts for cargos of biodiesel from Argentina and Indonesia have slowed. Imports from Argentina remained comparatively high by Aug 2017 given of contracts that were already in place before to a investigations, though these imports finished as of Sep 2017. Biodiesel imports from Indonesia final occurred in Dec 2016. Imports from these countries are expected to sojourn low unless a allotment is reached or U.S. biodiesel prices arise to equivalent a final duties.

U.S. biodiesel expenditure in 2016 totaled 2,189 million gallons, of that 1,569 million gallons (72%) were constructed domestically. U.S. biodiesel comforts ran during 69% of nameplate ability during 2016. Annual prolongation ability during a commencement of 2016 totaled 2,270 million gallons.

Illustration by U.S. Energy Information Administration.

U.S. biodiesel prolongation ability has given increasing somewhat to 2,348 million gallons as of Sep 2017, though a gait during that biodiesel comforts competence boost prolongation to residence probable supply shortfalls from reduced imports is unclear.

Biodiesel is typically some-more costly than petroleum-based diesel, so a detriment of lower-cost imports from Argentina and Indonesia competence serve diminution a cost competitiveness. During 2016, a normal mark cost of Gulf Coast biodiesel was $3.17/gal, that was $1.85/gal aloft than a petroleum counterpart.

Source: EIA

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