EPA's RFS Decision will push Biodiesel Usage

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EPA’s RFS Decision will push Biodiesel Usage
Scott Irwin, Agricultural Economist - University of Illinois

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The United States Environmental Protection Agency is beginning to comply with the letter of the law as it pertains to biofuels. Todd Gleason reports this could be a boon for biodiesel made from soybeans.

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EPA this week announced it would force oil companies to find more ways to use renewable fuels. This is something the oil industry has resisted saying it was too difficult to use much more than the ten percent ethanol blend already found in gasoline. This is called the blend wall and is actually less than the total number of gallons of renewable fuels congress mandated be used in 2016 when it originally wrote the law.

Since not all cars can burn greater than 10 percent ethanol in gasoline, and the amount of gasoline used in the United States is less than the renewable fuels mandate required by law, there is a renewable fuels gap left…something like a billion and half gallons. EPA hasn’t moved to force oil companies, yet, to find a new ways to fill that whole gap, but it closed it up big time and that’ll leave companies scrambling says University of Illinois Agricultural Economist Scott Irwin.

Irwin :10 …be higher ethanol blends, E15 or E85 or biodiesel.

Quote Summary - And so, the really interesting question is what will fill the gap. Will it be higher ethanol blends, E15 or E85 or biodiesel.

There’s an easy answer to this question says Irwin.

Irwin :52 …get more biodiesel with soybean oil and other animal fats.

Quote Summary - At least for the next couple of years, biodiesel. Soybean oil prices since the low last August are up 25% and soybean prices are up just 3%. And meal has tanked over that same time period. One way or another it is beneficial to ag. Either I’m wrong and you get more ethanol in the form of E85 or you get more biodiesel with soybean oil and other animal fats.

The market is and has been for sometime forecasting the next winner in the biofuels industry and it appears at this point to be biodiesel made mostly from the soybean.