June 9th 2017
Some biofuel industry sources are expecting the Environmental Protection Agency to issue the preliminary 2018 renewable volume obligations (RVO) under the Renewable Fuel Standard (RFS) later today or early next week.
The market expectation is for 15 billion gal for conventional RINs. Weaver, an assurance, tax and advisory firm, said recently that the 2018 RVO estimates are for 19.5 billion gal of renewable fuel RINs, of which conventional RINs would be 15 billion gal and advanced biofuel RINs would be 4.5 billion gal.
The market expectations for the 2018 RVO are marginally higher than the 2017 RVO.
For 2017, renewable fuel RINs were pegged at 19.28 billion gal, of which, 15 billion gal were for conventional RINs and 4.28 billion gal for advanced biofuel.
Weaver said that the 2018 gasoline demand forecast was pegged at 143.81 billion gal or 14.4 billion gal E-10 blending. Additional ethanol blending via E15 and E85 was pegged at 0.25 D6 RINs.
The need for biomass-based diesel volumes in renewable fuel were pegged at 0.35 billion D4 RINs or 233 million gal after subtracting 14.4 billion gal from 15 billion gal.
D5 RIN forecast was at 0.1 billion RINs, with 2016 production at 97 million RINs.
The need for biomass-based diesel volumes in advanced biofuel was pegged at 0.8 billion D4 RINs or 533 million gal after subtracting 3.15 and 0.45 and 0.1 from 4.5.
Andy Lipow, president of Lipow Oil & Associates, said that if the advanced biodiesel RVO comes in at 4.5 billion gal, that would be quite bullish for biodiesel RINS as current economics show the D4 RIN bank going insolvent at the end of this year.
“As the D4 price goes up, it will drag the ethanol D6 RIN price up with it, but at a slower rate,” he said.
OPIS reported on May 12 that the EPA sent its proposed 2018 RVO to the White House's Office of Management and Budget for review. OMB was expected to take about 30 days to complete its review.