NATIONAL BIODIESEL BOARD State of the States Jacobsen Conference May 24, 2018 Chicago, IL Shelby Neal Director of State Governmental Affairs National Biodiesel Board 1
NATIONAL BIODIESEL BOARD Represent more than 90% of US biodiesel & renewable hydrocarbon diesel (RHD) production. Lead industry efforts on government affairs, education, & research. 2
1600 1400 1200 1000 800 600 400 200 0 MINIMUM STATE VOLUMES 1.1 Billion Gallons Illinois Texas 412 MG California 1.2 Billion Gallons Illinois Texas 507 MG California Illinois Texas California 2016 2017 2018 CA TX IL MN OR NY IA PA RI 1.4 Billion Gallons Minnesota Illinois Texas 650 MG California Iowa New York Oregon 3
STATE VOLUME DRIVERS Requirements Financial Incentives Carbon Reduction Policies 4
STATE REQUIREMENTS B2 B5 B20 B5 B2 CT: B20 MA: B5 RI: B5 VT: B3 B5 B2 Currently Implemented Implemented after 2018 Note: Downstate New York has a B5 Bioheat requirement.
STATE ECONOMIC INCENTIVES $.20-$.50 $.50-$1.00 $1.00 or > Note: Incentives are valued on a B100 basis.
LOW CARBON POLICIES 5 billion total gallons of diesel demand Implemented Potential
MAJOR STATE POLICIES
MAJOR STATE POLICIES Half of all biodiesel sold in these states.
10 CALIFORNIA!
BMBD GROWTH IN CALIFORNIA 600 500 400 300 200 14 MG of BMBD..003% of market 507 million gallons of BMBD. >13% of diesel market. 100 0 2011 2012 2013 2014 2015 2016 2017 2019 2021 2023 2025 2027 2029 2030 BMBD Volume Source: 2011-1017 CARB quarterly reports. 11
2017 LCFS CREDIT GENERATION Fossil NG 1% RNG 7% Electric 12% Renewable Diesel 30% Other 1% Ethanol 35% Biodiesel 14% Ethanol Biodiesel RD CNG Electric RNG Other Source: CARB quarterly reports. Other category includes Fossil LNG, Hydrogen, CARBOB, Diesel, Innovative Crude. 12
LCFS Carbon Intensity Values 120 100 Biodiesel CI Values Other Values 102.76 80 79.46 80.09 60 50.23 51.83 48.06 40 20 19.87 28.68 32.83 0 UCO Corn Oil Tallow Canola Soy Cane Ethanol CNG Corn Ethanol ULSD Carbon Intensity (g/mj) 13
LCFS Carbon Intensity Values in $/gallon 120 100 $1.49 $1.32 $1.24 Biodiesel CI Values Other Values 80 60 $.91 $.88 $.95 40 20 $.40 $.35 0 UCO Corn Oil Tallow Canola Soy Cane Ethanol CNG Corn Ethanol $0.0 ULSD Carbon Intensity (g/mj) Example values calculated for $150/MT. 14
CARB RULEMAKING TIMELINE Updated regulatory package published in June. 15-day public comment period. Potential approval at September 28 board meeting. Implementation January 1, 2019. 15
CARB RULEMAKING ISSUES 2018 rulemaking to determine: Carbon intensity reduction schedule for 2021-2030. Verification process (similar to EPA s QAP program). Opt-Ins (renewable jet, military). Change EV credit methodology (more credits when renewable electricity is high). Litigation: CARB complying with Poet I case via 2018 regulatory package. Poet II case dismissed on January 5 th by Fresno County District Court. B6-B20 NOx additive approved: 21% PM decrease w/b20; 1.7% NOx decrease w/b20. 16
LCFS IMPLEMENTATION SCHEDULE Year Implementation Schedule Year Implementation Schedule Year Implementation Schedule 2015 1.0% 2016 2.0% 2017 3.5% 2018 *5.0% 2019 7.5% 6.25% 2020 10% 7.5% 2021 10% 8.75% 2022 10% 2023 11% 11.25% 2024 12% 12.5% 2025 13% 13.75% 2026 14% 15% 2027 15% 16.25% 2028 16% 17.5% 2029 17% 18.75% 2030 18% 20% Note: Diesel reduction remains at 3.5% until CARB complies with Poet I court case. Source: https://www.arb.ca.gov/fuels/lcfs/lcfs_meetings/092217workshop_presentation.pdf. Slide courtesy of Joe Gershen, Encore BioRenewables, LLC.
PROJECTED BMBD VOLUMES UNDER LCFS 2500 1.75 Billion Gallons 2.15 Billion Gallons 2000 1500 1000 1 Billion Gallons 1.8 Billion Gallons 500 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Low BMBD High BMBD Source: CARB Illustrative Supply Scenario Calculator (https://www.arb.ca.gov/fuels/lcfs/rulemakingdocs.htm) 18
LCFS CREDIT PRICES In Dollars per Metric Ton (MT). May, 2017 - May, 2018. $77.50/MT $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 May June July Aug Sept Oct Nov Dec Jan, 2018 Feb March April May $153/MT Source: Progressive Fuels Ltd.
LONG-TERM LCFS COMPLIANCE Compliance may be easier than it seems due to: E15 Co-Processed Renewable Diesel ZEV rules Indirect Land Use Change (iluc) 20
ILUC OVER TIME 70 Soy Carbon Score 60 50 40 30 20 10 0 US EPA, 2008 CARB, 2009 US EPA, 2010 CARB, 2015 Argonne, 2017 Carbon Score Note: Values in g/mj of CO2. 21
OREGON CLEAN FUELS PROGRAM Year 2016.25% 2017.5% Implementation Schedule Implementation Schedule 2018 1.0% 2019 1.5% 2020 2.5% 2021 3.5% 2022 5.0% 2023 6.5% 2024 8.0% 2025 10.0%
OREGON CLEAN FUELS PROGRAM 60 50 40 30 20 10 0 2015 2016 2017 Biodiesel Renewable Diesel 23
OREGON CLEAN FUELS PROGRAM Electric 5% Biodiesel 35% Ethanol 58% Ethanol Biodiesel Electric RNG Other Other: Diesel, gasoline, LPG, fossil CNG. 24
WASHINGTON STATE Composition of Legislature: Senate: 26 Democrats; 23 Republicans. House: 50 Democrats; 48 Republicans. Governor: Democrat. 2018 Legislative Session: SB6203, Carbon Tax bill sponsored by Sen. Carlyle. Imposes tax of $12-$30/MT. Passed Environment, Ways & Means, & Rules Committees. HB 2338, LCFS bill sponsored by Rep. Fitzgibbon. Patterned after California & Oregon. Passed Environment & Transportation Committees. $15/MT Carbon Tax Likely on November Ballot: Protect Washington Act Filed March 2 nd by Alliance for Clean Jobs & Energy. 25
QUESTIONS? Thanks! Shelby Neal Director of State Gov. Affairs sneal@biodiesel.org @ShelbyBiodiesel 26
TEXAS (BD&RD) The portion of the biodiesel blend is exempt from the state s $.20 per gallon excise tax. For example, B20 would receive an exemption worth 4 cents. Q: Is the exemption limited to B20? No. 27
KENTUCKY (BD&RD) $1 per gallon tax credit for producer or blender. Capped at $10 million. Pro-rated. 28
ILLINOIS (BOTH BD& RD) Blends above B10 receive a full exemption of the state s 6.25% sales tax on fuel. 29
IOWA (BD ONLY) 3 cpg road tax differential (29.5 vs. 32.5 cents) Production incentive extended to January 1, 2025 (2 cpg). Consumption incentive extended to January 1, 2025. Reformulated to 3.5 cpg on B5 and 5.5 cpg on B11. 30
INCENTIVES (OTHER) Maryland (BD only) 3 cpg state income tax credit for all gallons of B5 or higher Bioheat blends purchased. Rhode Island (BD only) Biodiesel portion of blend is exempt from road tax. 31
NEW YORK STATE New York State: (BD only) Bioheat consumer tax credit of 1 cent per percent of biodiesel in finished blend of heating oil. Expires December 31, 2020. 32
NORTHEAST CARBON POLICIES 400 MGPY potential RGGI & RPS States
2016 LCFS CREDIT GENERATION RNG 8% Electric 5% Fossil NG 2% Renewable Diesel 25% Biodiesel 20% Ethanol 40% Ethanol Biodiesel RD CNG Electric RNG Source: CARB quarterly reports. CARBOB, Diesel, & Hydrogen results not included due to de minimis quantities reported. 34