POINTERS: The U.S. Biodiesel Market and Implications for the Palm Industries

By: Mr. J. Alan Weber

Mr. Alan Weber is a founding partner of MARC-IV, a consulting company that specializes in the development of industrial products from agricultural resources. Some of Mr. Weber’s current client responsibilities include positioning biodiesel in the US alternative fuels marketplace and advising the National Biodiesel Board on economic & technical activities. He was active in the formation of the Thomas Jefferson Institute for Crop Diversification, a nonprofit organization created to examine and commercialize nontraditional crops, which offer excellent potential for the development of specialized industrial products. Weber is a recipient of the National Biodiesel Board’s Industry Outstanding Commitment Award and the Columbia, MO Business Times “Forty Under Forty” Class of 2005 Award. Weber has served as President of the Board of Directors for the Agricultural Leadership of Tomorrow Foundation and currently serves on the University of Missouri College of Agriculture, Food, and Natural Resources Ag Alumni Association Board. Weber completed his undergraduate training in agricultural economics at the University of Missouri, graduating with honors, Summa Cum Laude. He completed his Masters in Agricultural Economics in the same department.

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President George W. Bush signed into law the Energy Independence and Security Act of 2007 (EISA) on December 19, 2007. The legislation was designed to reduce U.S. dependence on foreign oil by increasing the supply of alternative fuels. EISA requires increased biofuel production, 36 billion gallons by 2022, and must be met, in part, from fuels such as biodiesel. The program differentiates between "conventional biofuels" and "advanced biofuels." Advanced biofuel is renewable fuel, other than corn-based ethanol, with lifecycle greenhouse gas emissions that are at least 50 percent less than greenhouse gas emissions produced by gasoline or diesel. EISA also requires the specific use of one billion gallons of biomass based diesel fuel, a category that includes biodiesel, by 2012 and requires U.S. EPA to determine and promulgate the applicable volume of biomass- based diesel that will be required in 2013 and beyond. In June, 2011 EPA proposed a 1.28 billion gallon volume obligation for biomass based diesel in 2013. The purpose of this paper is to examine the availability of feedstock supplies that could be used to meet the RFS2 biomass based diesel fuel and advanced biofuel volume obligations in 2013 and beyond.

The RFS2 has become an important driver for biodiesel industry growth, however one of the industry’s primary issues is access to raw material sources in order to help maintain price competitiveness with petroleum based diesel fuel. The biodiesel industry has experienced significant volatility in the past few years and production decreased in 2009 and 2010 for a number of reasons including global trade policy, weaker energy prices in 2009, and policy uncertainty in 2010. During this time period, biodiesel producers have made use of a variety of fats and oils sources, including soybean oil, inedible tallow and greases, yellow grease, canola oil, palm oil, and corn oil generated from ethanol facilities. The industry appears to have turned an economic corner and production in 2011 has increased significantly and monthly production volumes have eclipsed historic highs, although RFS2 rules are impacting the feedstocks utilized for biodiesel production.

Economic analysis has been conducted to examine future biodiesel growth prospects given RFS2 regulations and economic conditions including oil price forecasts, global policy, population trends, and growth of other biofuels. This presentation will specifically address the U.S. EPA proposed rule regarding the 2013 biomass based diesel fuel volume obligation and outline prospects for future industry growth.

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Questions & Answers (7) :

Bartholomeus Situmeang

3 years ago

I can't see both full report & presentation slides

Alan Weber

13 years ago

Azharuddin Amin—RFS2 obligated parties comply with the program utilizing RINs (Renewable Identification Numbers). Yesterday a 2010 biodiesel RIN was valued at $1.40 per gallon. An ethanol RIN (conventional biofuel) was valued at less than $0.05 per gallon. To generate a biodiesel RIN, EPA must approve the feedstock pathway as an advanced biofuel. The palm pathway remain under review by EPA and therefore palm based biodiesel does not currently generate a D4 RIN. Approved pathways (yellow grease, animal fats, canola oil, soybean oil) would currently have a compeive advantage in the U.S. market.

Azharuddin M Amin

13 years ago

Sir, if we compared biofuels which made from CPO with other sources which one of them is more compeive. Based on your point of view, why Indonesian biofuel industries are not compeive compared to other countries. Azharuddin M Amin, Pekanbaru-Indonesia

Alan Weber

13 years ago

Vimal Baheti—The RFS2 program now plays a major role in the growth of the U.S. biodiesel market. The volume obligation for biom based diesel fuel in 2011 is 800 million gallons. Based upon EPA summary data, the U.S. industry is on track to meet that obligation. Currently, an important consideration for palm based biodiesel producers is their ability to generate D4 RINs in the U.S. market.

Administrator

13 years ago

Lamyaa El Enany - The presentation is READY for download.

Lamyaa El Enany

13 years ago

The presentation is not ready for download, please check , Lamyaa El Enany

Vimal Baheti

13 years ago

Sir, what is the effect of US Economy's slowdown in our markets. VIMAL BAHETI Indore, India