# National Biodiesel Board November 17, 2015 

# OMB Meeting November 17. 2015

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# Biodiesel Growth

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##  Reducing Greenhouse Gas Emissions  Biodiesel is cleaning up Diesel Fuel and Home Heating Oil (BioHeat)  Made in the USA -- Increasing Commercial Scale Production of the “World’s Best Fuel” – 

## Domestically.  Room to Grow -- Today 60 billion gallon largely untapped Diesel Pool – there is plenty of room for growth for biofuels.  Green Jobs -- small volume increases in 2016 and 2017 create thousands of new green manufacturing jobs.  Increasing Domestic Energy Security for Transportation Fuels  Protects against OPEC Dictating Global Petroleum Prices  Decreasing the Cost of Diesel Fuel to Consumers 

# Biodiesel -- Helping President Obama Meet His Goals

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### Total Renewable Fuel Advanced Biomass Based Diesel 

## + Non -Cellulosic Advanced Total Advanced 

## + = Cellulosic Advanced 

### Conventional Renewable Fuels Total 

### Advanced 

# + =

15.00 1.75 1.8 1.9 

## Existing Law – Minimum Volumes as Set Forth in EISA (Reminder: EPA Sets Standards Each November – To ensure “at least” statutory volumes.)

# RFS Can Contribute Substantially To Achieving US CO2 Commitments

• US commitment to reduce CO2 emissions by 26% by 2025 • Transportation represents more than a quarter of total US CO2 emissions, and has furthest to go in reducing CO2 emissions • Biodiesel is highly effective at reducing CO2 emissions from transportation  81% CO2 reduction relative to petroleum diesel (avg of current feedstock mix)*  100 gallons biodiesel = 1 metric ton CO2 reduction • Increased use of biodiesel can contribute substantially to US CO2 commitments  Increasing biodiesel by 350 MM gal/yr through 2025 will achieve 18% of transportation sector CO2 reduction target 

##  Equivalent to removing 11.5 million cars from highways – 56 MM metric tons/yr

• *Based on EPA estimates. 5

# RFS Is A Policy Tool That Is In Place And Effective

• Increasing US biodiesel via RFS is comparatively simple  No infrastructure or vehicle modifications required  No implementation or jurisdictional complexities  Other policy approaches require changing behavior of consumers and/or industry 

##  RFS has demonstrated track record of success in stimulating US biodiesel investment


# • RFS is effectively invisible to end users of diesel fuel  Biodiesel is a highly cost-effective means of reducing CO2 – available NOW  Substantial capacity available to expand US production  Data show little or no pass - through of costs to consumers
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# Biodiesel Has A Significantly Lower Carbon Footprint Than Petroleum Diesel

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# The Transportation Sector Has A Long Way To Go To Meet US Commitments To Achieve A 26% Reduction In CO2 Emissions By 2025

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# There Is Abundant Available US Capacity To Increase Biodiesel Production Far Above The EPA- Proposed Volumes – Now And Well Into The Future

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# Biodiesel Imports

0 200 400 600 800 1000 1200 1400 1600

2012 2013 2014 2015 2016 

### 53 MG 544 MG 

### 313 MG 712 MG 850 MG 

### 1.047 MG 1.38 MG 1.42 MG 1.3 MG 1.3 MG Imported Gallons (MG)

Year

*2015, 2016 est. projected imports 

### Biodiesel Imports to U.S. (millions of gallons) Domestically Imported fuel



### Data collected from U.S. EPA EMTS 0 500 1000 1500 2000 2500 3000 3500

53 MG

544 MG 313 MG 712 MG 850 MG 1 BG Imported Gallons (MG)



### Year 

### *includes actual, annualized and projected data Biodiesel Imports to U.S.

2012 - 2016* 

### Total Imports 2012 - 2017 = 3.4 billion

gallons*

2016 2015 2014 2013 2012

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10 20 30 40 50 60 70

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun July Aug Sep Oct 2012 2013 2014 2015 Cents per Pound

Soybean Oil (Illinois) crude/degummed Canola Oil -RBD (Chicago) Bleachable Fancy Tallow - Renderer (Chicago) Choice White Grease (Chicago) Yellow Grease (New York) 

# Feedstock Prices

11$0.52 $0.49 $0.43 $0.35 $0.30 $0.26 $0.26 $4.50 $4.26 $3.70 $3.16 $2.74 $2.37 $2.33

$- $0.10 $0.20 $0.30 $0.40 $0.50 $0.60

$- $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00

2011 2012 2013 2014 2015F 2016F 2017F Dollars per Pound Dollars per Gallon

Average Price of Feedstock Cost of Feedstock per Gallon Cost of Production Vegetab le oil 52% Distiller Corn Oil 11% Animal Fats & UCO 37% 

## 2015 Vegetabl e oil 52% Distillers Corn Oil 19% Animal Fats & UCO 29% 

## 2017 Cost of Production (2011 -2017)

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# US Farm Program Payments (ARC & PLC)

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## Reduced Feed Costs Due to Lower Meal Values 

## Increased Revenue Due to Higher Animal Fat

Values Glycerin Provides an Additional Energy Source for Feed Rations to Help 

## Mitigate Risk 

# How Does Increased Biodiesel Production Impact Livestock Production?

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### - 440 880 1,320 1,760

0% 10% 20% 30% 40% 50%

2011 2012 2013 2014 Biodiesel Gallons (Millions) Lowest Carbon Feedstock % 

## Biodiesel use of lowest carbon feedstocks

Biodiesel production Distillers corn oil, animal fats, recycled oils/greases 42% 9% 15% 15% 17%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2011 2012 2013 2014 

## Feedstock shares for biodiesel (including renewable diesel) Other Recycled oils/grease s Animal fats Distillers corn oil Canola Oil Soybean oil

Source: EPA EMTS production data; feedstock data for biodiesel from EIA Monthly Biodiesel Production Report; assumed equal renewable diesel feedstock shares from DCO, animal fats, recycled oils 

## Share Of Biodiesel Production From Lower Carbon 

## Footprint Feedstocks Has Increased, Even With Rising Biofuel Production Biodiesel Increasingly Utilizes A Diverse Range Of Feedstocks

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### - 440 880 1,320 1,760
$0.00 $0.70 $1.40 $2.10 $2.80 $3.50

2011 2012 2013 2014 Biodiesel Gallons (Millions) $/gal of biodiesel 

## Cost of lowest carbon feedstocks

Biodiesel production Distillers corn oil, animal fats, recycled oils/greases Source: EIA Monthly Biodiesel Production Report (February 2015); feedstock prices from Jacobsen, translated to $/gal assuming 7.5 lb/gal 

## Increased Biodiesel Production Is Not Constrained By 

## Available Feedstocks Lowest Carbon Feedstocks Have Fallen In Price, While Biodiesel Production And The Share Of Low- Carbon Feedstocks Have Increased

Source: LMC International, “Current and Future Supply of RFS2 Qualifying and Non - qualifying Oils and Fats for Biofuels,” July 2013 16

## 2.4 bill gal

0.4 bill gal 0.8 bill gal 

# Biodiesel Production Capacity 3.6 billion gallons Registered facilities producing biodiesel Facilities registered, but not currently producing biodiesel Production facilities not yet registered under RFS

Source: Biodiesel plant list 2 - 6 - 13 from Docket EPA- HQ- OAR-2013 -0479; numbers are from a combination of NBB, EIA, and EPA databases. 

# Biodiesel Production Increases Are Not Constrained By Available Biodiesel Capacity

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# Managing The Biomass- based Diesel/ Advanced Biofuel Balance: Inducing Innovation – Reducing Blend Wall Pressure Keep the Advanced Program at the Statutory volumes of 5.5 and 7.25 BG respectively for 2015 and 2016. Over 10 billion RIN gallons of Advanced Biofuels are registered at EPA. 

## Biodiesel and Renewable Diesel will generate at least 3 BG of Advanced Biofuels in 2015. 

# • BBD and Brazilian Ethanol are proven Advanced Biofuels at scale. 

# • Increasing BBD ensures volumes in largely untapped diesel fuel market, reducing pressures on gasoline and ethanol. 

# • But other AB technologies can still emerge, and EPA must support increasing volumes overall. 18

# Consumers Benefit From Biodiesel

 Biodiesel lowers cost at the pump for consumers.  Lowers the cost of Heating Oil in the Northeast .  Decreases GHG and Air Emissions, including in NYC and the Nations’ Cities through Local Bus and Heating Oil Programs like those in New York City, San Francisco, Denver and Dallas.  Supports the rural economy, including moving toward sustainable agriculture and reduced food costs.  Fuels Distribution System is already in place to add 

### more biodiesel to the marketplace.  Engines and Engine Manufacturers Like Biodiesel (B20 blends and higher). Baltimore Maryland B5 No2 Unbranded Ultra- Low Sulfur Diesel 1.655 07/24/2015 Baltimore Maryland No2 Unbranded UltraLow Sulfur Diesel 1.66 07/24/2015 CADDO MILLS Texas B5 No2 Unbranded Ultra- Low Sulfur LED Diesel 1.6805 07/24/2015 CADDO MILLS Texas No2 Unbranded UltraLow Sulfur LED Diesel 1.682 07/24/2015 CAPE CANAVERAL Florida B5 No2 Unbranded Ultra- Low Sulfur Diesel 1.74 07/24/2015 CAPE CANAVERAL Florida No2 Unbranded UltraLow Sulfur Diesel 1.75 07/24/2015 CORAOPOLIS Pennsylvani

a B5 No2 Unbranded

Ultra- Low Sulfur Diesel 1.6599 07/24/2015 CORAOPOLIS Pennsylvani

a No2 Unbranded UltraLow Sulfur Diesel 1.6752 07/24/2015 CORAOPOLIS Pennsylvani

a No2 Unbranded UltraLow Sulfur Diesel 1.6672 07/24/2015 CORAOPOLIS Pennsylvani

a B5 No2 Unbranded

Ultra- Low Sulfur Diesel 1.6722 07/24/2015 CORPUS CHRISTI Texas B5 No2 Unbranded Ultra- Low Sulfur Diesel 1.6295 07/24/2015 CORPUS CHRISTI Texas No2 Unbranded UltraLow Sulfur Diesel 1.6315 07/24/2015 19

# A Proven Track Record

2021221.35 1.74 1.66 1.9

1.1 1.8 1.7 1.85

2012 2013 2014 2015 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 Billion Gallons 

### NERA High Volume Scenario Biomass-based Diesel Fuel Production

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# NERA asserts diesel prices will increase 4,000% in 2015 NERA makes this assertion even though its new report was released in August 2015 and diesel prices had been dropping all year long while biodiesel production increased

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# What Now – A pragmatic and credible path forward Ensuring meaningful (and more than reasonable) increases in Biomass-based diesel furthers the goals of Congress (and moves the Country forward on this Administration’s climate plans) Agreement: Biodiesel is cost-effective in reducing US CO2 emissions, Biodiesel can play an important role in helping the US to meet its commitments to reduce CO2 emissions. There is no limitation on ability to use biodiesel, and there is ample US production capacity and feedstocks available to increase US production and consumption well above the EPA’s current proposed volumes for 2015 - 2017.

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# What Now – A pragmatic and credible path forward Yet... two troubling themes arose in the most recent proposal, one from EPA (surprisingly) and the other from the American Petroleum Institute (unsurprisingly). EPA’s (surprising) departure from its prior actions and Congressional intent: • In its most recent RFS proposal, one of the reasons the EPA gave for its anemic biodiesel volume proposal for 2015 – 2017 was the desire to maintain “flexibility” and allow competition to fill up the advanced biofuels category. 

## • But, this ignores the distinct diesel market and is counter to EPA’s purported concerns about the constraints on use of ethanol, and sugar ethanol is the only other major advanced biofuel available. • More important, such “flexibility” concerns are beyond the scope of EPA’s authority and entirely irrelevant in setting the 2015 – 2017 biomass-based diesel volumes . 26

# What Now – A pragmatic and credible path forward The sky is not falling as a result of the RFS...The second theme we have heard is the continued drumbeat by API of the alleged negative impact of the RFS on retail prices. The API has reiterated this theme in a recent study they commissioned (from NERA consulting), predicting 

## that expanding RFS volumes will have immediate and catastrophic impacts on retail prices and the US economy – absurdly blaming biodiesel for much of that asserted negative impact (the study is fundamentally flawed for a host of reasons). We do not know how much of this API fear-mongering is stoking concerns at EPA or elsewhere about increasing RFS biodiesel volumes, but we feel that the danger is exactly the opposite: • biodiesel is currently providing important retail price competition at the pump to petroleum, diversifying this nation’s energy supply and increasing energy independence and national security; • there have been no measurable retail price effects of RFS to date (on either blended diesel or blended gasoline prices); and 

## • a failure to increase the biodiesel volume now will lead to a reduction in significant current unused US production capacity – production capacity that could be used to increase competition in fuels to the benefit of US consumers, as well as to generate additional employment and income in rural communities throughout the US. 27

# What Now – A pragmatic and credible path forward We have heard the RFS as being a key component to the Administration’s plans to reduce GHG emissions over which the Administration is engaged on a lot of fronts. The Administration has set an ambitious reduction target for 2025 and faces hard fights, as it continues to promote new technologies and seeks world -wide consensus. 

## Now in the middle of this struggle, we are giving this Administration a nice easy pitch, right up the middle: whether to significantly increase biodiesel volumes under the RFS. No limits on use, plenty of capacity, plenty of feedstocks, all with existing technology, and with a lot of additional domestic jobs thrown in for good measure. At best, EPA’s recent proposal is an attempt at a “bunt” when Congress told EPA to swing for the fences and make real advancements. But EPA’s current overly cautious proposal is just a waste of a terrific – and rare – opportunity to make a meaningful contribution towards meeting the US’ climate goals; and it puts at risk a lot of 

## investments made by the industry in the expectation of significant continued increases in the RFS biodiesel volumes. 28

# Questions? asteckel@biodiesel.org 

# 202 - 737- 8801 @annesteckel
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