Market Update: CARB just released and certified some new Carbon Intensity pathway scores that were accepted by biodiesel and renewable diesel producers. The newly certified scores use the CA-GREET 2.0 model as the scores from the old CA-GREET 1.8b model will be phased out at the end of this year. The new scores for biodiesel and renewable diesel made from corn oil are on average higher, lower for soybean oil, and dropped the most on average for used cooking oil. The new scores can be found
here.
RIN prices continue to rise as more in the industry are believing that there is going to be a drawdown in carryover RINs as obligated parties retire RINs for 2014 compliance on August 1st and 2015 compliance on Decemeber 1st. In the May 31st, 2016 Proposed Rule EPA estimated that there were "at most" 1.72 billion carryover RINs from 2013 that can be used for 2014 compliance vs PRX's estimate that there "are" 1.62 billion carryover from 2013 that can used for 2014 compliance. PRX is forecasting a draw down in carryover RINs each year to 705 million 2014 RINs that can be used for 2015 compliance and only 197 million 2015 RINs that can be used for 2016 compliance. We've published these PRX calculations in the last report and I've included them again below for those interested in understanding how they were calculated.
AltAir Fuels is currently the only registered renewable fuel producer that can generate renewable jet fuel RINs. EPA's EMTS data for February through May classified 587,905 2016 D4 RINs as Renewable Jet Fuel.
Analysis: For crop year 15-16 through April, 3.363 billion pounds of soybean oil was used to produce biodiesel, with 415 mil lbs used in April (pg 1). If this pace continues, 5.045 bil lbs of soybean oil will be used in 15-16 vs USDA's June WASDE estimate of 5.5 bil lbs. Soybean oil's share of all feedstocks used to produce biodiesel for 15-16 through March is 52.24%, up slightly from last crop year (pg 2). Corn oil used to produce biodiesel decreased in Apr to 87 mil lbs, bringing the 15-16 through April total to 745 mil lbs, yielding about 91 mil gals of biodiesel (pg 4 & 5).
EIA's Jun-STEO has 2016 biodiesel production optimistically estimated at 1.527 bil gals (pg 7). PRX forecasts US biomass-based diesel (biodiesel & renewable diesel) and renewable jet fuel production for 2016 at 1.525 bil gals, with 217.1 mil gals being US renewable diesel and jet fuel production. EIA's STEO is also enthusiastically forecasting 2017 biodiesel production at 1.631 bil gals vs PRX's forecast of 1.648 bil gals of biodiesel, renewable diesel, and renewable jet fuel.
PRX estimates US biomass-based diesel and renewable jet fuel consumption for 2016 at 2.097 bil gals, which is above the 1.9 bil gal Biomass-based diesel RVO (pg 12). These 197 million extra gallons can be used toward the other Advanced and/or Renewable fuel RVOs. The EIA's Jun-STEO is expectantly forecasting the 2016 & 2017 biodiesel and imported renewable diesel consumption at 2.151 & 2.351 billion gallons, respectively. In addition, there is likely to be 200-300 million gallons of domestic renewable diesel and jet fuel consumed in both 2016 & 2017. The 2017 Biomass-based diesel RVO is 2 billion gallons. PRX is forecasting 2.255 billion gallons of biomass-based diesel and renewable jet fuel comsumption in 2017.
In April, EIA's import survey had imports increasing to 55.06 mil gals: Neste Oil USA imported 17.64 mil gals of renewable diesel into CA from Singapore and biodiesel was shipped from Argentina (22.05 mil gals), Indonesia (6.216), Canada (4.998), South Korea (2.268), & Australia (1.89 mil gals) (pg 13). For 2016 through April, imports from Singapore are at 60.312 mil gals, Argentina is at 35.532, Canada 22.26, Indonesia 10.374, South Korea 3.78 & Australia is at 1.89 mil gals. EIA's export data comes from the US Department of Commerce and is reporting 10.332 mil gals of biodiesel exported in April, bringing the 2016 total to 24.234 mil gals (pg 14). PRX is estimating 2016 biodiesel and renewable diesel net imports at 572 mil gals vs the May STEO forecast of 649 mil gals.
The annual compliance deadline for obligated parties to submit their RIN retirements for 2013 compliance was March 1st, 2016. PRX is using its "RIN Generation Adjusted," which takes into account generation errors, noncompliance production, and exports (exporters have their own RVOs that do not count towards obligated parties RVOs) less "RINs Retired for Compliance" to calculate "Leftover RINs" that can be carried forward and used for the 2014 Compliance year (pg 19, see footnotes for exact calculations). PRX is estimating 1.62 billion 2013 RINs can be carried forward into 2014, assuming that none of the 14.5 billion 2013 RINs that were already retired before the 2013 compliance deadline are being used to fill obligated parties 2014 obligations. PRX is making this assumption because the compliance deadline for obligated parties to comply with their 2014 obligations isn't until August 1st, 2016 and only 22.4 million 2014 RINs were retired when adjusted for exported volumes of renewable fuel.
PRX has calculated the 2014 carryover RINs into 2015 at only 705 million RINs by subtracting both the carryover RINs from 2013 and the 2014 "RIN Generation Adjusted" from PRX's calculation of the amount of RINs that will actually be required by obligated parties (pg 19). When EPA issues its Final Renewable Volume Obligations these are used along with "EIA STEO consumption" data and forecasts to calculate the percentage standards. However, obligated parties must use the percentage standards to calculate their individual obligation using the amount of nonrenewable gasoline and diesel that they "produced" or "imported" into the 49 United States less Alaska. Thus, using actual EIA PSM data for motor gasoline and diesel "production" plus "imports," adjusting for exports because exporters have separate RVOs and adjusting for refiner and blender net input of fuel ethanol and PRX's forecasts for biodiesel and renewable diesel consumed we can estimate the aggregate amount of nonrenewable gasoline and diesel produced and imported into the 49 United States less Alaska. Then using the percentage standards PRX back-calculated the RINs required for each RVO (pg 18). For 2014-2016 PRX is calculating that more RINs will be required than EPA published in its Final Rule. For 2014, PRX is calculating that obligated parties need to retire 17.43 billion RINs vs EPA's 2014 Final Renewable fuel RVO of 16.28 billion RINs (pg 18).
For 2015, PRX calculates 17.67 billion RINs need to be retired vs EPA's 2015 Renewable fuel RVO of 16.93 billion RINs (pg 18). By removing the 2014 carryover RINs and 2015 "RIN Generation Adjusted" from PRX's calculation of the amount of RINs that will be required to be retired by obligated parties, PRX estimates the 2015 carryover RINs into 2016 at only 197 million RINs (pg 19).
