US Biomass-Based Diesel Monthly Update

PRX Email Archive

Produced by Ryan Ruikka

Market Update: EPA's EMTS RIN data is now complete for 2015 and can be compared to the 2015 Final Renewable Volume Obligations (RVOs). The 2015 Biomass-based diesel RVO was set at 1.73 billion actual gallons, using a conversion factor of 1.53 requires 2.659 billion D4 and/or D7 (Cellulosic Diesel) RINs to be retired by obligated parties for 2015 (PRX uses 1.53 as the energy density factor instead of 1.5 because it takes into account renewable diesel's higher energy densities of 1.6 & 1.7). EPA's 2015 D4 RIN data adjusted for errors, noncompliance production, and exports is nearly 2.63 billion RINs (or nearly 1.715 billion actual gallons) that can be used to help fill this obligation. The rest of this obligation can be filled with carryover D4 and/or D7 RINs from last year or obligated parties can carry a deficit into 2016.

The 2015 Advanced biofuel RVO contains the Biomass-based diesel RVO by the nested nature of the law and can be compared to the sum of all the 2015 advanced biofuel RIN data. Advanced biofuel is made up of Cellulosic biofuel, Biomass-based diesel, and an undifferentiated advanced biofuel category that generates D5 RINs, which includes non-cellulosic sugarcane ethanol, naphtha, renewable heating oil, renewable compressed natural gas, & non-ester renewable diesel in 2015. The 2015 Advanced biofuel RVO is set at 2.88 billion RINs and the sum of the D3, D4, D5, & D7 RIN data adjusted for errors, noncompliance production, and exports is 2.904 billion RINs, exceeding the RVO requirement by 24.22 million RINs.

The 2015 Renewable fuel RVO contains the Advanced biofuel RVO plus conventional biofuel and can be compared to the sum of all the 2015 RINs generated. In 2015, conventional biofuel was composed of non-cellulosic ethanol, biodiesel, and non-ester renewable diesel. The 2015 Renewable fuel RVO is 16.93 billion RINs and the sum of the 2015 D3, D4, D5, D6, & D7 RINs adjusted for errors, noncompliance production, and exports is 16.99 billion RINs, leaving a surplus of 59.53 million RINs. However, obligated parties can carry a deficit from 2014 or use carryover RINs to meet their 2015 obligations, leaving it hard to determine the actual amount of surplus RINs for 2015. PRX estimates that there are currently around 2.22 billion surplus RINs in the market today.

See page 19 for a full breakdown of EPA RIN data vs the RVOs.

Analysis: 4.007 billion pounds of soybean oil was used to produce biodiesel from Jan- Oct of 2015, with 408 mil lbs used in October. Soybean oil's share of all inputs to biodiesel production is up only .7% for 2015 through Oct to 45.81%. Corn oil used to produce biodiesel increased in Oct to 102 mil lbs, bringing 2015 through Oct numbers to 855 mil lbs.

PRX estimates US biomass-based diesel (biodiesel & renewable diesel) production for 2015 at 1.404 billion gallons, with actual production decreasing in Oct to 107.3 MMgal and YTD data at 1.157 billion gallons. The EIA's Jan-STEO (solely biodiesel) has 2015 production just shy of 1.3 billion gallons with monthly data increasing in Dec to 135.4 MMgal, while forecasting 2016 production increasing to 1.641 billion gallons and the new 2017 forecast at 1.713 billion gallons. EPA's D4 Domestic RIN generation volume data for 2015 is at 1.416 billion gals (EPA's D4 data understates total domestic biodiesel and renewable diesel production because some is generated as D5 RINs). PRX estimates 2015 US renewable diesel production at 181 MMgal (REG's Geismar facility is still down from its second fire, but is scheduled to reopen soon).

PRX estimates US biomass-based diesel consumption for 2015 at 1.715 billion gallons, using actual EPA data adjusted for generation errors, noncompliance production, and exports. The EIA's Jan-STEO has 2015 biodiesel and imported renewable diesel consumption at 1.718 billion gallons. Also, the Jan-STEO has increased 2016 forecasted consumption to 2.365 billion gallons and has released a 2017 forecast of 2.476 billion gallons.

PRX estimates biomass-based diesel imports of 508 MMgal for 2015, with actual data from EIA's PSM for Oct at 61.4 MMgal and Jan to Oct 2015 at 423 MMgal--of which Neste Oil's plant in Singapore sent 163.5 MMgal, CARBIO's Alternate Biomass Tracking program has increased Argentina's biodiesel imports to 123.3 MMgal, Indonesia is at 69.5 MMgal, and Canada 53 MMgal. PRX estimates US biodiesel exports in 2015 will be 92.3 MMgal, with actual EIA PSM data in Oct at 6.76 MMgal and from Jan to Oct of 2015 showing 79.1 MMgal of biodiesel exported.

Ryan Ruikka
Energy Analyst

The ProExporter Network

114 S. Main St. Suite 100

Chelsea, MI 48118

Off: 734-475-0454

Fax:734-475-0452

Ryan@prxgeo.com

The analysis above is not intended as a trade recommendation. The analysis and forecasts are based on available public data and on the best judgment of PRX, but cannot be guaranteed to conform to future reality.