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Iowa Renewable Fuel Summit

January 27, 2009 Des Moines, Iowa John Campbell. Iowa Renewable Fuel Summit. When is a renewable fuels mandate really a mandate?. When it does not cost taxpayers (too much). When it does not push up fuel prices (too much). When it does not push up food prices (too much).

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Iowa Renewable Fuel Summit

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  1. January 27, 2009 Des Moines, Iowa John Campbell Iowa Renewable Fuel Summit

  2. When is a renewable fuels mandate really a mandate? • When it does not cost taxpayers (too much). • When it does not push up fuel prices (too much). • When it does not push up food prices (too much). • When it does not harm the environment (too much).

  3. Taxpayer Cost

  4. Fuel Cost Biodiesel Example (Domestic Supply Only) Soy Breakeven (Plant) $3.30/gallon Diesel (Terminal) $1.40 $1.90 Freight + Terminal .20 Spread $2.10 Credit (1.00) Market Spread $1.10 • 1% Blend would use 500 ml/gls. • Cost = .0135/gl. • 2% blend would use 1.0 bl.gls. • 7.5 billion pounds fats and oils 30% of total available soy • Feedstock price impact? Global imports? • Assume market spread = $2.35/gl. • 2% x $2.35 = $.047/gl. • Assume no tax credit = $3.35/gl. • 2% x $3.35 = $.067/gl.

  5. Greed - Fear - Envy • Political Fear = Biodiesel Waiver • If the Administrator determines that there is a significant feedstock disruption or other market circumstances that would make the price of Biomass based biodiesel fuel increase significantly… • 60 Days mandate reduction 15% • 60 Days mandate reduction 30%

  6. Corn Waiver: • Allows the Administrator to modify “in whole or in part” the corn RFS if: • The requirements would severely harm the economy, or • Environment of a state, or • There is an inadequate supply of domestic renewable fuel

  7. Cellulose Waiver: • If the “projected” volume of cellulose ethanol is less than the minimum RFS the Administrator shall reduce the RFS to the projected volume. • Cellulose waiver interaction with grain waiver: • The cellulose waiver is mandatory but the overall RFS reduction is discretionary • Meaning – it is possible that a mandatory waiver of cellulose could lead to a discretionary increase in corn ethanol.

  8. Example 2010 - 2022 Example 2010 Cellulose RFSCelluloseProjection 12.950 .1 0 Waiver Options: • 12.850 • 12.950 (Corn, Biodiesel, Other) ________________________________________________________ Example 2022 Cellulose RFSCelluloseProjection 36.0 16.0 2.0 Waiver Options: • 22.0 • 36.0 (Corn, Biodiesel, Other)

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