EPA's RFS Puts Biodiesel in the Drivers Seat

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EPA’s RFS Puts Biodiesel in the Drivers Seat
Scott Irwin, Ag Economist - University of Illinois

The nation could be running on a lot more biodiesel in future. Todd Gleason reports the latest U.S. EPA proposal would firmly set a path to create a second biofuels industry in the United States.

The United States Environmental Protection Agency…
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The United States Environmental Protection Agency, by the authority of congress, sets mandates - within some congressional parameters - for the amount of renewable energy the nation should consume. Part of this energy plan has allowed U.S. farmers to build and deploy corn based ethanol as a gasoline additive. Phase two, as set out by congress and proposed by EPA in May, may do the same thing for biodiesel made from oilseeds says University of Illinois ag economist Scott Irwin.

Irwin :18 …driver’s seat rather than corn based ethanol.

Quote Summary - If one takes the EPA policy as given and projects for the remaining life of the RFS through 2022, essentially going forward biodiesel is in the driver’s seat rather than corn based ethanol.

Biodiesel is made mostly from vegetable. Essentially the same cooking oils found on store shelves… mostly this oil is pressed from the soybean. The new proposed rules, which again follow the direction of congress to make the United States less dependent on foreign oil for its energy supply, would push U.S. vegetable oil crushing capacity to its limit.

Irwin :17 …we would go past that number.

Quote Summary - U.S. EIA estimates current production capacity for biodiesel in the United States is around two-point-three-billion gallons. There is a good chance by 2016 or 2017 demand would surpass that number.

Maybe or maybe not depending on how much soybean oil crushing capacity currently idled can be brought back online and or how much biodiesel can be imported to meet the mandate. Either way it is clear more biodiesel made from soybeans, and some other crops, is now coming into play. The big difference may be that there is already an existing infrastructure to handle most of the increase. The ethanol industry had to be built and deployed. Farmers took on that burden. The oilseed crushing industry already exists and simply needs to be targeted.