With the final 2017 rule for the Renewable Fuel Standard (RFS) in place, a recent Today in Energy looks at a revised biofuels forecast through 2017 published by the Energy Information Administration (EIA). The Short-Term Energy Outlook (STEO) finds that the new rule will have the greatest impact on biomass-based diesel consumption. This category is expected to grow while ethanol consumption is expected to remain largely unchanged.
As explained in Today in Energy, all renewable fuels under the RFS generate Renewable Identification Number (RIN) credits. These are used by obligated parties, such as refiners and importers of gas and diesel, to meet their renewable fuel obligations, or requirements, under the RFS. The Biomass-based diesel RINS, also known as D4 RINS, are more valuable than D6 RINS for grain-based ethanol due to their ability to meet multiple RFS targets. The RIN value plus the blender’s tax credit have helped grow the biomass-based diesel consumption in 2015 and 2016.
In the latest STEO, EIA anticipates that biomass-based diesel consumption will increase from 1.7 billion gallons in 2015 to a record level of 2.5 billion gallons in 2017, 0.5 billion gallons above the biomass-based diesel RFS target of 2.0 billion gallons. The additional biomass-based diesel will help meet the advanced biofuel RFS target.
Ethanol is the most-consumed renewable fuel in the U.S., and plays the largest role in compliance with the RFS target for total renewable fuel. EIA forecasts that ethanol consumption will continue to be driven primarily by domestic gasoline demand. Nearly all motor gasoline sold in the country today is blended with up to 10 percent ethanol, but STEO reports that infrastructure, economic, and distribution issues still limit significant growth in ethanol blends above 10 percent.