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SREs and Biofuels Demand Destruction · 7/3/2019 · SREs and Biofuels Demand Destruction by Scott...
Transcript of SREs and Biofuels Demand Destruction · 7/3/2019 · SREs and Biofuels Demand Destruction by Scott...
SREs and Biofuels Demand Destructionby Scott Irwin
July 3, 2019
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Scott H. Irwin
SREs and Biofuels Demand Destruction
SREs and RFS Mandates
% standard = 100 X [RVO/(petroleum gasoline + diesel use – SREs)]
2017 Final EPA Conventional Standard:
8.32% = 100 X [(15BG)/(180.13BG – 0)]
2017 Actual Conventional RVO
13.887BG = (8.32%/100) X (166.9BG)
Why13.9BG instead of 15BG?
Fix the % standard and then drop the base of gasoline and diesel use retroactively
SREs and Biofuels Demand Destructionby Scott Irwin
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0.0
0.5
1.0
1.5
2.0
2016 2017 2018 2019
Bill
ion
Gal
lons
Total Reduction in RFS Mandates due to SREs
Projected
Total Reduction in RFS Mandates due to SREs
Weekly (Thursday) D4 Biodiesel, D5 Advanced, and D6 Ethanol RINs Price, 01/25/2007 – 06/27/2019
0.00
0.50
1.00
1.50
2.00
Pri
ce ($
/gal
.)
Date
Weekly (Thursday) D4 Biodiesel, D5 Advanced, and D6 Ethanol RINs Price, 01/25/2007 - 06/27/2019
Source: OPIS
D4
D6
D5
Source: OPIS
SREs and Biofuels Demand Destructionby Scott Irwin
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Weekly (Friday) Ethanol Price at Iowa Plants, 01/26/2007 – 06/28/2019
1.00
1.50
2.00
2.50
3.00
3.50P
rice
($/g
al.)
Date
Weekly (Friday) Ethanol Price at Iowa Plants, 01/26/2007 -06/28/2019
Source: AMS/USDA
Source: AM S/USDA
8.0
8.5
9.0
9.5
10.0
10.5
11.0
Per
cent
Year
Monthly Refinery and Blender Net Input of Ethanol as a Percent of Net U.S. Production of Conventional and Reformulated Motor
Gasoline Blended with Ethanol, January 2007 - April 2019
Source: EIA
Source: EIA
Monthly Refinery and Blender Net Input of Ethanol as a Percent of Net U.S. Production of Conventional & Reformulated Motor Gasoline Blended with Ethanol, January 2007 – April 2019
SREs and Biofuels Demand Destructionby Scott Irwin
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3
4
5
6
7
8
9
10
11P
erc
en
t
Year
Monthly Implied Domestic Consumption of Ethanol as a Percent of
U.S. Finished Motor Gasoline Supplied,
January 2007 - April 2019
Source: EIA
Source: EIA
Monthly Implied Domestic Consumption of Ethanol as a Percent of U.S. Finished Motor Gasoline Supplied, January 2007 – April 2019
9.33
9.61 9.65
9.75 9.83
9.91
10.02
10.14 10.07
10.21
9.00
9.25
9.50
9.75
10.00
10.25
10.50
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
%
Year
Annual U.S. Implied Domestic Consumption of Ethanol as a Percent of U.S. Finished Motor Gasoline Supplied, 2010 - 2019*
Source: EIA *2019 through April
Annual U.S. Implied Domestic Consumption of Ethanol as a Percent of U.S. Finished Motor Gasoline Supplied, 2010 – 2019*
Source: EIA
*2019 through April
SREs and Biofuels Demand Destructionby Scott Irwin
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Competitive Ethanol Prices in E10 Gasoline and the Blend Wall
Ethanol Market with Increasing Supply and Falling Prices
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13.3
13.9
13.2 13.3
14.3
14.8
15.4
15.9 16.1
12
13
13
14
14
15
15
16
16
17
2010 2011 2012 2013 2014 2015 2016 2017 2018
Bill
ion
Gal
lons
Year
Annual U.S. Production of Fuel Ethanol, 2010 - 2018
Source: EIA Source: EIA
Annual U.S. Production of Fuel Ethanol, 2010 - 2018
0
2
4
6
8
10
12
Mill
ion
Gal
lons
Year
U.S. Refinery and Blender Production of Conventional Motor Gasoline with Greater Than Ed55, January 2007 - April 2019
Sources: Iowa Deparment of Revenue Minnesota Commerce Department
Source: Iowa Department of RevenueMinnesota Commerce Department
U.S. Refinery and Blender Production of Conventional Motor Gasoline with Greater Than Ed55, January 2007 – April 2019
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0.0
0.5
1.0
1.5
2.0
2.5M
illio
n G
allo
ns
Year
Monthly Sales of E85 in Iowa and Minnesota, January 2007 - April 2019
Sources: Iowa Deparment of Revenue Minnesota Commerce Department
Minnesota
Iowa
Source: Iowa Department of RevenueMinnesota Commerce Department
Monthly Sales of E85 in Iowa and Minnesota, January 2007 – April 2019
BBD Demand and the RFS
SREs and Biofuels Demand Destructionby Scott Irwin
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BBD Demand and the RFS
BBD Demand and the RFS
SREs and Biofuels Demand Destructionby Scott Irwin
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BBD Demand and the RFS
0.00
0.25
0.50
0.75
1.00
2016 2017 2018 2019
Bill
ion
Gal
lons
Total Reduction in BBD Demand Due to SREs
Projected
Total Reduction in BBD Demand Due to SREs
SREs and Biofuels Demand Destructionby Scott Irwin
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Estimated Monthly Biomass-Based Diesel RIN Generation (annualized) Compared to Total Biomass-Based Diesel (BBD) Demand Pre-SRE, January 2014 – January 2019
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19
Bill
ion
Gal
lons
Month
Estimated Monthly Biomass-Based Diesel RIN Generation (annualized) Compared to Total Biomass-Based Diesel (BBD)
Demand Pre-SRE, January 2014 - January 2019
BBD RIN GenerationTotal BBD Demand Pre-SRE
Estimates of the Economic Magnitude of Declines in U.S. BBD Demand Due to SREs
Total or Item 2016 2017 2018 2019 Average
(1) Total BBD Demand Decline Due to SREs (billion gallons) 0.362 0.739 0.937 0.778 2.817
(2) Average Iowa Plant Price of Biodiesel ($/gallon) 3.23 3.16 3.09 3.16 3.16
(3) Economic Magnitude of BBD Demand Decline ($) 1.17 2.34 2.89 2.46 8.86
Note: 2018 and 2019 are projected.
SREs and Biofuels Demand Destructionby Scott Irwin
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U.S. Appeals Court in Americans for Clean EnergyJuly 28, 2017By requiring upstream market participants such as refiners and
importers to introduce increasing volumes of renewable fuel into
the transportation fuel supply, Congress intended the Renewable Fuel Program to be a “market forcing policy” that would create
“demand pressure” to increase consumption of renewable fuel. (pp. 20-21)
Thank you for attending Please submit questions
Scott [email protected]
@ScottIrwinUI
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