GROWING YOUR BUSINESS WITH BIODIESEL
BIODIESEL DEMAND DRIVERS 2
WHAT S DRIVING BIODIESEL DEMAND? RVO Federal and state tax incentives Sustainability 3
WHAT S DRIVING BIODIESEL DEMAND? RVO Revised RVO offers longer-term certainty and growth for biomass-based diesel Supports a solid, positive growth trajectory for biomass-based diesel over the next two years One billion gallon industry less than four years ago 4 Copyright 2016 Renewable Energy Group, Inc.
EPA RFS2 REQUIREMENTS 1 Volumes Used to Determine the Final Percentage Standards 2 2014 2015 2016 2017 Cellulosic biofuel 33 mm gal 123 mm gal 230 mm gal n/a Biomass- based diesel 1.63 bn gal 1.73 bn gal 1.90 bn gal 2.0 bn gal Advanced biofuel 2.67 bn gal 2.88 bn gal 3.61 bn gal n/a Total renewable fuels 16.28 bn gal 16.93 bn gal 18.11 bn gal n/a Growth in Biomass Based Diesel Standard Growth Advanced Biofuels Standard Final Volume Standards Billions of Gallons 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 Actual Final Volume Standards Billions of Gallons 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 Actual 0.0 2012 2013 2014 2015 2016 2017 0.0 2012 2013 2014 2015 2016 Source: 1 EPA 11/30/2015 Note: 2 All volumes are ethanol- equivalent, except for biomass- based diesel which is actual.
BIODIESEL ECONOMIC CONSIDERATIONS 6
ECONOMICS OF SELLING BIODIESEL State tax incentives State grants Potential RIN values Biodiesel Tax Credit 7
STATES WITH NOTABLE BIODIESEL POLICIES New York City Source: Data from DOE Alternative Fuels Data Center and Individual State Statues Note: Current as of 01/08/2016 8 LEGEND Low Carb Fuels Stnd Mandate - Fuel Use or Bioheat Tax Incentive - Sales Tax Incentive - Production Fleet Requirement Bioheat Mandate passed Awaiting Surrounding States Policy currently suspended Renewable Energy No Group, major Inc. policy
EXAMPLES OF STATE INCENTIVES Selling biodiesel blended fuels can have a positive economic impact on your business when you take advantage of state tax incentives Iowa: Eligible for a 3.5 cent retail tax credit per gallon for fuel containing a minimum of B5, and 5.5 cents per gallon for blends of B11 or more. Illinois: Biodiesel blends of B11 and above are exempt from the state excise tax of 6.25% at the retailer. California: LCFS creating tremendous biodiesel blending economics for blenders. Texas: $.20/gallon retailer incentive for every gallon of B99 blended. 9
BIODIESEL RIN VALUES RINS are the compliance mechanism utilized by EPA to track compliance by the obligated parties. Biodiesel customers can receive up to 1.5 RINS for each gallon of biodiesel they purchase. RINS currently trading at approximately $1.50/biodiesel gallon. REG customers can purchase biodiesel with or without RINS. 10
BIODIESEL BLENDING ECONOMICS 10/10/16 (no state incentive) NYMEX Heating Oil: $1.62/gal REG Plant Price ($.80 over) RINS Value Customer Biodiesel Price $2.42/gal $1.50/gal $0.92/gal 11
BIODIESEL TAX CREDIT Biodiesel Tax Credit first enacted in 2005 Biodiesel and renewable diesel blenders' tax credit of $1.00 for each gallon of biodiesel blended into diesel fuel Most recent tax credit will expire at the end of 2016 industry is working to extend the tax credit 12
FLEET TRENDS 13
EFFICIENCY Fleets are looking for efficiencies wherever they can be found The need to operate efficiently has been a trend in the fleet industry in recent years Largely driven by the cost of fuel Alternative fuels, electronic engines, automated transmissions are being used 14
SUSTAINABILITY Pressure for fleets to be sustainable Many fleets embrace it because it helps improve efficiency. Customers also expect it What is exciting to many fleet managers is the lower emissions from alternative fuels Alternative fuels also offer a lower cost option that other emission solutions to achieve sustainability goals 15
CUSTOMER CASE STUDY PETROLEUM WHOLESALE Distributes fuel in 9 states, operates 40 c-store/travel centers Began offering biodiesel blended fuel in 2013 Today, up to 95% of locations offer up to a B20 blend year round Economics drove decision to offer biodiesel blends There s no downside to biodiesel, and a lot of advantages to it. The benefits include state incentives such as an exemption from the diesel fuel tax in several states, price advantages over traditional diesel, biodiesel being a renewable fuel and its clean-burning properties. JOHN COOK 16
REG OVERVIEW 17
BENEFITS OF BIODIESEL Drop-in diesel replacement Feedstocks are primarily fats, oils, and greases left over from protein production or restaurant use, e.g.: Inedible corn oil Animal fats Used cooking oil Soybean oil Provides lubricity to petroleum-based fuel 18
BENEFITS OF BIODIESEL 78% reduction in direct lifecycle carbon dioxide emissions compared to petroleum diesel fuel Reduces lifecycle greenhouse gas emissions by 57 86% B20 (20% biodiesel blend) reduces hydrocarbon emissions by up to 20%, carbon monoxide emissions by up to 11% and particulate matter by up to 10% 19
BROAD MARKETING AND LOGISTICS CAPABILITIES Distribution Footprint at Plants, Terminals and to Customers 38 terminal locations (plus 12 plants) Delivered biodiesel and co-products to 47 states, 5 provinces in Canada REG markets: B99/B100 #2 ULSD B2-B20 Blends 20
QUESTIONS 21