Biodiesel Meeting RFS2 Requirement

John Davis

The new Renewable Fuels Standard (RFS2) has been in effect for 90 days, and biodiesel is meeting the requirement in the first quarter of the standard’s existence.

Biodiesel Magazine reports the green fuel is making it, despite the loss of the federal biodiesel tax credit:

Despite the sharp decline in biodiesel production after the expiration of the tax credit, Gary Haer, vice president of sales and marketing for Renewable Energy Group Inc., said there is enough volume to satisfy prescribed RFS2 requirements. He added that 1.8 billion gallons of capacity are currently registered with the U.S. EPA. The current obligation under the new RFS2 rule is 1.15 billion gallons. “There’s more than enough capacity already registered with the EPA to address the current and foreseeable future need of biomass-based diesel RINs for the industry,” he said.

Coleman Jones, biofuels implementation manager for General Motors of North America, said through July the biodiesel industry produced about 210 million gallons. “At that current rate we would produce another 150 million gallons more, which would push that total to 360 million gallons,” he said. “This is significantly short of the 650 million-gallon inferred mandate for 2010; however, there are enough 2008 RIN credits to bridge the difference between the cost of biodiesel and their petroleum competitors.”

According to analysis put out by the National Biodiesel Board and EPA, approximately 350 million gallons would have to be produced for the remainder of the year. Haer said that would provide the RINs necessary for carry-forward provisions allowed from 2008-2009 to meet the current obligation.

The article goes on to point out that the loss of the federal blender tax credit has caused instability in the market, and with original engine manufacturers concerned about producer behavior, there are concerns RIN prices could spike as obligated parties scramble to meet their quotas. That could cause some biodiesel producers to rush into production, hurting the quality of biodiesel.