DALLAS–Fuels Institute kicked off the FUELS2019 conference this week, bringing together leaders within the transportation and energy markets to discuss the evolution of fuels such as biofuels. Leading the discussion, Dr. Tristan Brown, assistant professor of energy resource economics at SUNY College of Environmental Science and Forestry, shared preliminary results of research on the biomass-based diesel and biodiesel markets, as well as demand and availability of feedstocks.
Biodiesel production has quadrupled in the United States since 2009, but there is a disconnect between where it’s produced and consumed: the PADD 2 and PADD 3 (Midwest and Gulf regions, respectively) are producing biodiesel, while PADD 1 and PADD 5 (Northeast and Western regions, respectively) are home to the most demand, said Brown. Feedstocks have largely kept pace with biodiesel production, he added, with slightly more than half coming from soybean oil.
The biggest challenge biodiesel could face is infrastructure and downstream logistics, Brown said, noting that most biodiesel is transported by trucks, which is cost prohibitive and a non-sustainable option over time. This poses a few questions for the biodiesel market’s future: How much biodiesel can the U.S. transport into other PADD regions, and can biodiesel move by rail or pipeline and become less reliant on trucking?
Ethanol also has experienced growth. Mario Lopez, a reporter at Argus Media, noted the U.S. saw record ethanol blending and exports in 2018. Steady ethanol production has remained even as margins continue to fall, and blending rates have been steady despite small refinery exemptions.
Key influences on the ethanol market’s future could transpire in the regulatory environment, Lopez suggested, particularly with Renewable Fuel Standard (RFS) volume obligations, low carbon fuel standard policies percolating in more states outside of California, and the Environmental Protection Agency’s proposed rulemaking that combines a one-pound (psi) Reid vapor pressure (RVP) waiver for higher ethanol blends such as E15 with reforms to the Renewable Identification Number (RIN) market.
Next, John Eichberger, executive director of the Fuels Institute, led an interactive discussion on the biofuels market with:
- Chris Bliley, vice president of regulatory affairs at Growth Energy
- David Cox, director of operations at Coalition for Renewable Natural Gas
- Scott Fenwick, technical director at National Biodiesel Board
- Ken Kleemeier, vice president of fuels at Kum & Go
- Geoff Moody, vice president of government relations at American Fuel & Petrochemical Manufacturers
With statutory provisions of the RFS ending in 2022, a few panelists pointed out there are misperceptions that the RFS is going to expire. Instead, EPA will reset renewable fuel volumes up to 2022 and work to set volumes after 2022. For retailers that decide to incorporate higher ethanol blends such as E15 into their fueling offer, Kleemeier suggested that the uncertainty surrounding the future of the RFS poses long-term challenges for retailers making investments in new equipment and new store builds, as well as the ability to sell E15 year-round.
FUELS2019, the annual Fuels Institute conference, took place May 21-23 in Dallas, bringing together experts from across the fuels, energy and transportation industries to learn how today’s issues are affecting the market.