2017 AFOA. Biofuels Forum. Larry Schafer Playmaker Strategies October 2017

Transcription

1 2017 AFOA Biofuels Forum Larry Schafer Playmaker Strategies October

2 Overview Ø The RVO Process Ø The Tax Credit Ø Trade Issues 2

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4 RVO (in gallons) Cellulosic Biofuel 123M 230M 312M 238 Biomass-based Diesel 1.73B 1.9B 2.0B 2.1B 2.1B Advanced Biofuel 2.88B 3.61B 4.28B 4.24B Ethanol 14.05B 14.5B 15.0B 15.0B Total Renewable Fuel 16.93B 18.11B 19.28B 19.24B 4

5 RVO (in gallons) U.S. Biodiesel and Renewable Diesel Market (millions of gallons) Source: EPA EMTS * ** Biodiesel and Renewable Diesel D4,D5,D6 EPA BBD Volume *EPA estimated volume **Proposed 5

6 The Latest EPA Published Request for Further Comment PotenCal OpCons for ReducCons for 2018 Advanced Biofuels Biomass-Based Diesel Total Renewable Fuels Types of Waiver Authority General Waiver Authority Cellulosic Waiver Authority Biomass-Based Diesel Waiver Authority What Impact Will This Have on the Final Rule? 6

7 The Waiver Game 2018 proposed Advanced Biofuels = 4.0 bg GWA Cellulosic = 238 mg CWA ConvenConal Biofuels = 15.0 bg GWA Total Renewable Fuels bg 2018 Biomass-Based Diesel = 2.1 bg BBDWA Types of Waiver Authority General Waiver Authority (GWA) Cellulosic Waiver Authority (CWA) Biomass-Based Diesel Waiver Authority (BBDWA) 7

8 General Waiver 1. Severely Harm the Economy or the Environment of a State 2. Inadequate DomesCc Supply July 28, 2017 American s for Clean Energy vs. EPA EPA used inadequate domescc supply to waive the total volume - DC Circuit said NO -- statute requires a supply side assessment. Now EPA is solicicng further comment on both issues let s discuss 8

9 General Waiver 1. Severely Harm the Economy or the Environment of a State o Never Used by EPA o Not Previously Decided by Courts 2. Inadequate DomesCc Supply o What does domescc supply really mean? o DomesCc Supply vs. DomesCc ProducCon 9

10 General Waiver and Advanced Biofuels EPA SuggesCng and RequesCng Comment on Using GWA against the statutory 4.0 billion gallon Advanced Biofuels volume Inadequate DomesCc Supply o Using the supply side analysis, EPA suggests they can waive the advanced program based on the lack of domescc produccon of biodiesel and renewable diesel. Severe Economic Harm o EPA requescng comment on whether they can use severe economic harm to a state or region to waive AB 10

11 Biomass-Based Diesel Waiver EPA SuggesCng and RequesCng Comment on Using BBDWA against the 2018 Biomass-based Diesel volume of 2.1 billion gallons Waiver: May reduce BBD by 15% for a 60 day period Threshold: If there is significant renewable feedstock disrupcon or other market circumstance that would make the price of BBD to increase significantly. EPA cites the expiracon of the biodiesel tax credit and the imposicon of new duces on imports of biodiesel from ArgenCna and Indonesia As factors that impact the price of biodiesel 11

12 The Math 2018 Biomass-based Diesel 15% of 2.1 billion gallons = 315 million gallons 2.1 bg 315 mg = billion gallons Impact on 2018 Advanced Biofuels 315 mg x 1.5 = 473 million gallons 4.24 bg 473 mg = 3.77 bg Impact on 2018 Total Renewable Fuels mg = bg 12

13 The IMPACT Where does this leave us for 2018? RVO Final Rule is expected on Nov. 30, Volumes stay sog on expectacons that EPA may incorporate new waivers into the program. If EPA stays with proposed numbers, then obligateds will concnue to slow walk volumes 2017 will look much like ??? 13

14 Will Tax Reform Move in 2017? The Tax Credit Budget ReconciliaCon = InstrucCon to Tax WriCng Commihees to move forward on Tax Reform House passed last week Senate expected to take up next week Biodiesel Tax Credit Biodiesel Tax Credit House No PosiCon Senate Grassley / Cantwell 14

15 The Trade Case What Happens Next on the Trade Case? Subsidy Case - countervailing duces (CVD) To be decided on November 7 Final Order December 5 AnCdumping Case (AD) Preliminary Decision October 20? Final Decision in March, 2018 Final Order in May,

16 The Trade Case Trade Flows let s take a global tour US to the US ArgenCna to Europe Europe to the U.S. Canada to the US Singapore to the US South Korea to the US Australia to the US 16

17 Nearly 200 Plants are registered with the EPA to supply BBD US Market Share by ProducCon Capacity 17% REG WORLD ENERGY 39% 9% 6% DIAMOND GREEN RBF ADM AGP Cargill LOUIS DREYFUS HERO BX 5% Renewable 2% 2% 3% 3% 4% 5% 5% FUTUREFUEL 58 others w/ 5M+ gals Page 17

18 Thank you! Larry Schafer Playmaker Strategies