A diverse and experienced panel of experts presented to a full room at the second annual Jacobsen International Biodiesel Conference in mid-October in Chicago, IL. Presentations covered the biodiesel and feedstock markets with particular attention paid to the California Low Carbon Fuel Standard (LCFS) and the benefits available to both biodiesel producers and feedstock providers. Export market opportunities and a detailed global outlook on the world vegetable oil markets were also presented, along with the regulatory and political climate.
Graham Noyes, Stoel and Rives, and Larry Banuelos, SCB and Associates, LLC, began by discussing the details and potential of California’s LCFS for both the biodiesel and feedstock industries. This sentiment was echoed by Ryan Steuben, FEC Solutions, for distiller’s corn oil.
Noyes and Banuelos gave a good overview on how the program works. California has set goals to reduce the carbon intensity of transportation fuels 10 percent by the year 2020. A number of industries, including any company that sells diesel fuel in the state of California, are required to comply. In order to meet the carbon threshold, fuel sellers have to ensure that their fuel meets a specific target number, which is reduced each year. This is especially impactful for the rendering industry, whose feedstocks benefit greatly from favorable carbon intensity (CI) scores. Diesel sellers will have to purchase an increased amount of renewable fuel or credits in order to offset their carbon deficit each year. Renderers could potentially see greater demand from the biodiesel sector each year as CI targets are lowered.
Within the LCFS, a lower CI score for a feedstock generates a greater credit impact. Soybean oil has a CI score of 83.25, while tallow has a score of 40.18 and used cooking oil has a score of 18.72. The most favorable score is for distillers’ corn oil, which comes in at a 4.0. With LCFS credits trading at $84 per metric ton, the credit generating potential for tallow is 60 cents per gallon, used cooking oil is 82 cents per gallon, and distillers’ corn oil is 97 cents per gallon. This is compared to soybean oil at approximately 14 cents per gallon.
Banuelos estimated there is currently 200 million gallons of diesel fuel sold monthly in California. The United States (US) Department of Energy predicts that 38 percent of all advanced fuels will be purchased or consumed in California.
Traveling from Geneva, Switzerland, Kevin McGeeney, SCB Group, discussed the European biodiesel and feedstock markets. He showed how double-counting and indirect land usage rules are creating opportunities for used cooking oil, with trading, in some markets, now higher than virgin vegetable oils. The potential for exports from the United States to the European Union has been increased by new restrictions on Argentine soy methyl esters and what is becoming an increasingly limited and regulated market. McGeeney described a trade barrier being constructed brick by brick, which is rapidly becoming impassable. Given these restrictions, US sellers with International Sustainability and Carbon Certification approval stand to benefit greatly. Market premiums of as much as five cents per pound are already being seen in the US used cooking oil market.
David Nadasi, American Commodities, discussed the world vegetable oil outlook with a good deal of attention paid to the soy, palm, and canola oil markets. World Energy’s Gene Gebolys and John Cusick, Renewable Biofuels, capped off the meeting with further discussion on the 2014 biodiesel market, regulation, and opportunities. Both followed up on Jonathan Phillips’, Renewable Fuels, earlier look at the 2014 regulatory environment and added insight on what the market picture could look like next year.
The Jacobsen debuted a new calculator on its website that provides users a quick way to calculate processing margins, blending margins, and LCFS credits. The conference was a sold-out event and welcomed attendees from the United States and Canada as well as a number of international participants from Europe and Korea. The Jacobsen will host its third annual International Biodiesel Conference in Chicago on June 4, 2014.
December 2013 RENDER | back