1 / 33

Scott H. Irwin

Will the EPA Reverse Itself on the Write Down of the Renewable Mandate? The Message from the RINs Market. Scott H. Irwin. EPA Proposed 2014 RVOs . E10 blend wall challenges drove EPA policy shift:

salim
Download Presentation

Scott H. Irwin

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Will the EPA Reverse Itself on the Write Down of the Renewable Mandate? The Message from the RINs Market Scott H. Irwin

  2. EPA Proposed 2014 RVOs E10 blend wall challenges drove EPA policy shift: “The proposal seeks to put the RFS program on a steady path forward - ensuring the continued growth of renewable fuels while recognizing the practical limits on ethanol blending, called the ethanol "blend wall.“ http://www.epa.gov/OTAQ/fuels/renewablefuels/documents/420f13048.pdf

  3. EPA Proposed 2014 RVOs E10 blend wall challenges drove EPA policy shift: “The proposal seeks to put the RFS program on a steady path forward - ensuring the continued growth of renewable fuels while recognizing the practical limits on ethanol blending, called the ethanol "blend wall.“ Novel legal argument for renewable mandate write down: “inadequate domestic supply” http://www.epa.gov/OTAQ/fuels/renewablefuels/documents/420f13048.pdf

  4. EPA Proposed 2014 RVOs

  5. EPA Proposed 2014 RVOs

  6. What are the Implications of the 10% Ethanol Blend Wall for the RFS?

  7. The Ethanol Market: No Mandate Price 5 bil. gal. = minimum for MTBE replacement Gasoline Blenders Selling Price Buying Price Demand Supply 1.1 x Pcbob Pe 13 bil. gal. = E10 blendwall Quantity 13

  8. The Ethanol Market: RFS Mandate RFS 2011 Price Gasoline Blenders Selling Price Buying Price Demand Supply 1.1 x Pcbob Pe Quantity 12.6 13

  9. The Ethanol Market: RFS Mandate RFS 2013 RFS 2011 Price Gasoline Blenders Selling Price Buying Price Demand Supply 1.1 x Pcbob Pe Quantity 12.6 13 13.8

  10. The Ethanol Market: RFS Mandate RFS 2013 RFS 2011 Price Gasoline Blenders Selling Price Buying Price Demand Supply 1.1 x Pcbob Additional biodiesel mandate Pe Quantity 12.6 13 13.8

  11. The Ethanol Market: RFS Mandate RFS 2013 RFS 2011 Price Gasoline Blenders Selling Price Buying Price D6 RINs Price = 0 Demand Supply 1.1 x Pcbob Additional biodiesel mandate: D6 = D4 RINs Price Pe Quantity 12.6 13 13.8

  12. The Biodiesel Market: No Mandate Supply Price Demand Pulsd Pbd = Quantity Q*

  13. The Biodiesel Market: Binding RFS Mandate RFS 2013 Diesel Blenders Purchase Price Selling Price Supply Price Pbd Demand Pulsd 1.28 Quantity Q*

  14. The Biodiesel Market: Binding RFS Mandate RFS 2013 Diesel Blenders Purchase Price Selling Price Supply Price Pbd “wet” RINs Price Demand Pulsd 1.28bg Quantity Q*

  15. The Biodiesel Market: Binding RFS Mandate RFS 2013 Diesel Blenders Purchase Price Net Selling Price Supply Price Pbd “wet” RINs Price Demand + Tax Credit Demand Pulsd 1.28bg Quantity Q1* Q2*

  16. The Biodiesel Market: Binding RFS Mandate RFS 2013 Diesel Blenders Purchase Price Net Selling Price Supply Price Pbd “wet” RINs Price Demand + Tax Credit Demand Pulsd 1.28bg Quantity Q1* Q2*

  17. Who Knew What When about the EPA Policy Change?

  18. http://feedstuffs.com/story-epa-says-leaked-rfs-levels-draft-45-103353http://feedstuffs.com/story-epa-says-leaked-rfs-levels-draft-45-103353

  19. OPIS biofuels news service reported on July 24: "There is lots of testimony on Capitol Hill this week on the subject of RINs, with various stakeholders reaffirming their positions on the controversial credits. A call for a repeal of the RFS by some lawmakers isn't regarded as a movement with any traction, but the noisy week has inspired buzz that EPA might act sooner rather than later and perhaps restate mandatory levels for blending that are part of the RFS.“

  20. OPIS biofuels news service reported on July 24: "There is lots of testimony on Capitol Hill this week on the subject of RINs, with various stakeholders reaffirming their positions on the controversial credits. A call for a repeal of the RFS by some lawmakers isn't regarded as a movement with any traction, but the noisy week has inspired buzz that EPA might act sooner rather than later and perhaps restate mandatory levels for blending that are part of the RFS.“ The next day, on July 25, OPIS reported: "Prices for D6 2013 ethanol RINS are in a freefall this morning, on chatter coming from Washington caucuses and hearing rooms, as well as on a sense that some major holders of RINs are liquidating some holdings. OPIS just confirmed that 2013 vintage D6 RINs moved in the last 15 minutes for just 90cts, after opening at $1.05 and plunging in 5ct increments in a clear sellers' panic. There is no word on the scale of volumes, but those holding RINs are frightened that some sort of remedy might be coming from the Environmental Protection Agency.“

  21. OPIS biofuels news service reported on July 24: "There is lots of testimony on Capitol Hill this week on the subject of RINs, with various stakeholders reaffirming their positions on the controversial credits. A call for a repeal of the RFS by some lawmakers isn't regarded as a movement with any traction, but the noisy week has inspired buzz that EPA might act sooner rather than later and perhaps restate mandatory levels for blending that are part of the RFS.“ The next day, on July 25, OPIS reported: "Prices for D6 2013 ethanol RINS are in a freefall this morning, on chatter coming from Washington caucuses and hearing rooms, as well as on a sense that some major holders of RINs are liquidating some holdings. OPIS just confirmed that 2013 vintage D6 RINs moved in the last 15 minutes for just 90cts, after opening at $1.05 and plunging in 5ct increments in a clear sellers' panic. There is no word on the scale of volumes, but those holding RINs are frightened that some sort of remedy might be coming from the Environmental Protection Agency.“ Only a few days later, on August 6, OPIS noted that: "It is a wild Tuesday morning in the paper markets for RINs - - Renewable Identification Numbers - - as well as most grades of gasoline. Reports from Washington indicate that there could be a forthcoming action from the Environmental Protection Agency, perhaps as early as today, that might grant some relief from targets on blending."

  22. What Do Recent Movements in RINs Prices Tell US about The Possibility of an EPA Reversal on the Renewable Write Down?

  23. http://blogs.platts.com/2013/12/30/rfs-2014/

  24. OPIS biofuels news service reported on February 25: Senator Charles Grassley of Iowa last week told reporters, "I would doubt there would be a complete reversal [from the proposal], which is what I would like to happen. I'd be surprised if there wasn't some modification of the original rule that still might be considered a partial victory for ethanol."   http://thegazette.com/wp-content/uploads/2011/08/grassley485.jpg

  25. www.farmdocdaily.illinois.edu

More Related