2011 Biodiesel Market Outlook
February 10, 2011
416 S. Bell Ave.
Ames, IA 50010
888-REG-8686
www.regfuel.com
1
REG Biodiesel Footprint
Copyright 2011
Renewable Energy Group®
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2011 Biodiesel Production
High
Low
High
Low
REG Danville
45 MGY, Startup: 11/2008
Danville, IL
REG Newton
30 MGY, Startup: 5/2007
Newton, IA
REG Houston
35 MGY, Startup: 08/2008
Seabrook, TX
High
Low
High
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Renewable Energy Group®
REG Ralston
12 MGY, Startup: 3/2003
Ralston, IA
High
High
High
Low
Low
Low
REG New Orleans
60 MGY, Startup: TBD
Destrehan, LA
REG Emporia
60 MGY, Startup: TBD
Emporia, KS
REG Seneca
60 MGY, Acquired: 04/2010
Seneca, IL
Low
Low
Low
High free fatty acid
feedstock conversion
(fats, corn, waste
greases)
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REG Clovis,
15 MGY, Acquired: 09/2010
Clovis, NM
Low free fatty acid
feedstock conversion
(soy, canola, refined fats)
America’s Advanced Biofuel
• EPA-defined “Advanced Biofuels” include
• Imported sugar cane ethanol
• Domestically-produced cellulosic ethanol
• Renewable diesel
• Biodiesel
• Biodiesel reduces greenhouse gas emissions by
up to 86% compared to petroleum diesel
• Only Advanced Biofuel which is domesticallyproduced and commercially available
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Renewable Energy Group®
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Biodiesel Plays Significant RFS2 Role
• Renewable Fuels Standard (RFS2) requires utilization of
renewable fuels by petroleum refiners, importers
Four Categories: Lifecycle GHG Reduction Minimums
(percent reduction from 2005 baseline)
Renewable fuel
20%
Advanced Biofuel
50%
Biomass-Based Diesel
50%
Cellulosic biofuel
60%
Copyright 2011
Renewable Energy Group®
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Biodiesel
RFS2 Volume Requirements
EISA Renewable Fuel Volume Requirements (RFS2) (billion gallons)
Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
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Renewable Energy Group®
Biomass-Based Diesel
requirement
Advanced Biofuel
requirement
0.8
1
0.90
1.33
1.83
2.50
3.67
4.83
6.00
7.33
8.67
10.00
12.00
14.00
1+, TBD by EPA
1+, TBD by EPA
1+, TBD by EPA
1+, TBD by EPA
1+, TBD by EPA
1+, TBD by EPA
1+, TBD by EPA
1+, TBD by EPA
1+, TBD by EPA
1+, TBD by EPA
Historic U.S. Biodiesel Production and
Consumption
1200
Millions of Gallons
1000
EU - Countervailing
Duty and Anti
Dumping duty
enacted
Exports to
EU Increase
800
780
MGY
600
Estimated
Production
Mirroring
2008
400
200
Implementation
of RFS2
0
2001
2002
2003
2004
2005
2006
U.S. Consumption
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Renewable Energy Group®
2007
2008
2009
2010
2011
2012
U.S. Production
Source: EIA, EPA, USDA
Agenda
RFS2 Implementation
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Renewable Energy Group®
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2010 RFS2 Compliance Update
• Combined 2009/2010 renewable volume
obligation (RVO) was 1.15 billion gallons
• RINS from 2008 & 2009 biodiesel production supplied
approximately 725 million gallons towards the total
• 425 million gallons of 2010 production needed to make up
balance
• USDA census data reports only 320 million gallons produced in
2010
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Renewable Energy Group®
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Sources: Census Bureau M3 11K Report; USDA FAS
Report for Imports/Exports
2010 RFS2 Compliance Update
• In aggregate REG believes obligated parties fell
short of 2009/2010 requirement
• Many of them may have to use their one-time deferral
• Many of obligated parties did meet their Renewable Volume
Obligations (RVO) in 2010
• Advanced Biofuels category created further confusion/concern
Copyright 2011
Renewable Energy Group®
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Sources: Census Bureau M3 11K Report; USDA FAS
Report for Imports/Exports
Monthly Gallons Needed to Meet Total Obligation
(800 mil gal Biomass-Based Diesel Only)
• 67 mil gal/month needed to meet total Biomass-Based
Diesel Renewable Volume Obligation
• Obligated parties off to slow start in 2011
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Renewable Energy Group®
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RIN Prices Play Key Role in Blending
Price per RIN (1.5x per gallon)
Historical Mid-Range RIN Prices
$0.92 per RIN,
$1.38 per gallon
$1.00
$0.90
$0.80
$0.70
$0.60
$0.50
$0.40
Blenders’ Credit
Reinstatement
$0.30
$0.20
$0.10
RIN values will need to continue elevate to encourage discretionary blending
$0.00
7/1/2010
8/1/2010
9/1/2010
10/1/2010
11/1/2010
12/1/2010
1/1/2011
July 2010 to January 2011
2010 RIN Price
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Renewable Energy Group®
2011 RIN Price
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Source: Oil Price Information Service
Obligated Parties RVOs
• Obligated Party: petroleum refiner or importer
• Renewable Volume Obligations (RVOs): gallons of
renewable fuels required to consumed
• Via wet gallons or RINs
• Based on gallons Jan. 1 – Dec 31, 2011
• Estimated percentage of total distillate to be consumed as
renewable fuel
• Cellulosic biofuel
0.01%
• Biomass-based diesel
0.68%
• Advanced biofuel
0.77%
• Renewable fuel
7.95%
Source: LT Hawthorne
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Renewable Energy Group®
Obligated Party RVO Example
Refiner producing 100,000 bpd gasoline + diesel in 2011
RVO Category
2011 RVO
Percentages
RVO Calc
RINs Required
Cellulosic biofuel
0.01%
153,300
153,300
30,660
122,640
Biomass based diesel
0.68%
10,424,400
10,424,400
2,084,880
8,339,520
Advanced biofuels
0.77%
11,804,100
1,226,400
245,280
981,120
Renewable fuels
7.95%
121,873,500
110,069,400
22,013,880
88,055,520
24,374,700
97,498,800
Total Obligation
- 121,873,500
2010 RINs (max) 2011 RINs (min)
RIN Utilization
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Renewable Energy Group®
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Source: LT Hawthorne
Current Biodiesel Blending Economics
02/04/2011
• Heating Oil
$2.71
• REG 9000/1 (FOB Midwest Plant)
$1.90 over H.O.
• REG 9000/1 Biodiesel Price
$4.61/gal
• Less
• Blenders Tax Credit
($1.00)
• RINS ($.92/2011 Biodiesel RIN)
($1.38)
• Customer Cost/Gal
Copyright 2011
Renewable Energy Group®
$2.23/gal
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Current Biodiesel Blending Economics
02/04/2011
• Heating Oil
$2.71
• REG 9000/10 (FOB Midwest Plant)
$1.70 over H.O.
• REG 9000/10 Biodiesel Price
$4.41/gal
• Less
• Blenders Tax Credit
($1.00)
• RINS ($.92/2011 Biodiesel RIN)
($1.38)
• Customer Cost/Gal
Copyright 2011
Renewable Energy Group®
$2.03/gal
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Thank You!
Rob Dascal
(832)392-8594
[email protected]
www.regfuel.com
416 S. Bell Ave.
Ames, IA 50010
888-REG-8686
www.regfuel.com
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