Biodiesel producers ramping up ahead of EPA mandate

Focus article by Leela Landress

MEDELLIN, Colombia (ICIS)–US biodiesel production looks to be gaining speed and the market is seeing more supply of co-product crude glycerine as the sector awaits the federal blending mandate expected by 1 June.

The Environmental Protection Agency (EPA) has said it plans to base the 2015 Renewable Fuel Standard (RFS), scheduled to be released by 1 June, on a combination of actual biofuels production to date and a projection of future production through the end of the year.

Under a consent decree reached last month between the EPA and two oil industry groups, the agency is scheduled to propose the 2014 and 2015 rules by 1 June and finalize them by 30 November.

The EPA had said it would also propose and finalize the 2016 RFS for all fuels and the 2017 biodiesel requirement on that same timeline to get the program back on schedule, following years of delays.

The agency sent its proposed RFS volumes for those years to the White House Office of Management and Budget for final review, but has not revealed the rules contents.

A co-product of biodiesel production, 80% spot crude glycerine prices have been heard trading at lower levels as the biodiesel sector is said to be increasing production.

Crude glycerine was assessed this week at 5.25-6.25 cents/lb on an FOB (free on board) basis in the US Midwest.

Prices along the US Gulf have been heard at a slight discount to the Midwest numbers and players in the sector are watching for a trade window to open to China as US prices decline.

“The trade window from US to China appears to be getting closer,” a source said. “Knowing the bulk of the available glycerine has about $135/tonne in inland logistics cost to get to a US port and factoring $100/tonne ocean freight for containers, tells me it’s getting close.”

US biodiesel output will average 81,000 bbls/day in 2015, or about 1.24bn total gallons, the US Energy Information Administration (EIA) said in its May Short-Term Energy Outlook.

For 2016, the EIA projects biodiesel production will average 84,000 bbls/day, or 1.29bn total gallons.

Biodiesel is an alternative fuel, produced from renewable resources. The most commonly used feedstocks are rapeseed, soy and palm oil.