Ethanol Blog

LINCOLN, Neb. (DTN) -- A Trump administration proposal to cut renewable identification numbers, or RINs, by 50% for fuels made using foreign feedstocks could hurt the biomass-based diesel industry despite what the industry has said is a robust Renewable Fuel Standard proposal of 5.61 billion gallons in 2026 for the biofuel, according to a new study from Advanced Biofuels Association.

The study released on Tuesday found the 50% proposal could stall growth in the industry and lead to higher costs for consumers.

The report prepared by GlobalData Agri, found there is "sufficient" domestic feedstock to meet the U.S. Environmental Protection Agency's projected production volumes of 4.3 billion gallons in 2026 and 4.6 billion gallons in 2027.

GlobalData found that the market opportunity is far greater for biomass-based diesel.

According to estimates from Lipow Oil Associates, U.S. biomass-based diesel demand is expected to reach 7 billion gallons by 2027 and grow to 9 billion gallons by 2030.

The study funded by the Advanced Biofuels Association, however, said that meeting the biofuel's demand would require continued access to global feedstock markets.

"EPA's proposal to cut the RIN value in half for fuels made with imported feedstocks would limit overall BBD market growth and drive-up consumer prices," the association said in a news release, "despite global supplies being more than sufficient to support expansion of American biofuel innovation."

The report estimates such a federal policy shift would introduce "significant cost pressures across the renewable fuel supply chain."

By reducing credit values for imports, the rule would effectively create a $250 to $400 per metric-ton premium for domestic feedstocks.

"A $200/metric ton rise in U.S. soybean oil prices alone could drive up D4 RIN prices by 42 cents," the AFBA said.

"These price pressures are expected to draw more domestic feedstocks away from food and other non-biofuel uses -- an unforced consequence of artificially distorting a global energy market that has plenty of supply for both."

The association recently shared the concerns at a recent EPA public hearing.

In that testimony the association argued that the proposal also marks a significant departure from longstanding precedent under the RFS which requires biomass-based diesel volumes be stated in actual gallons.

ABFA said that shifting the basis of compliance from gallons to RINs and discounting those RINs based on feedstock origin, adds "unnecessary complexity" and legal uncertainty to the program.

"EPA's job is to set targets that reflect what the market can deliver -- not to pick winners and losers," AFBF President Michael McAdams said. "This kind of sudden upending of the RFS, which has long been the most important piece of legislation supporting domestic biofuel producers, threatens investment, growth, and the future of American energy dominance."

The ABFA said it is urging the EPA to increase the biomass-based diesel requirement to at least 5.75 billion gallons, reflecting "real-world" capacity and market demand; to maintain volume targets in actual gallons, in accordance with the Clean Air Act and past implementation of the RFS; and to withdraw the proposed 50% devaluation for RINs generated from foreign feedstocks, "preserving flexibility" and cost-effectiveness in meeting national biofuel goals.

"This rule, as currently drafted, could threaten continued investment, limit consumer access to innovative American-made fuels and artificially drive up prices," McAdams said.

"But there's still time to course-correct. The EPA has an opportunity to make smart, targeted adjustments that protect consumers and support continued industry growth."

Read more on DTN:

"Trump EPA Proposes Large RFS Boost," https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

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