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EPA Biofuel Mandates in Question

Inability to meet current mandate increased cost of compliance and led to lawsuits seeking relief from refiners

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PIXABAY
PIXABAY

EPA Biofuel Mandates In Question

  • The EPA is expected to recommend to the White House a decrease in the biofuel blending mandates for 2021 to below 2020 levels.

  • It has been difficult and costly for refineries to meet blending requirements since coronavirus has decreased fuel demand.

  • Mandates for 2021 have already been delayed by more than half a year because of the pandemic.

  • If the RFS blending rate is set at 10% of fuel consumption it would be 13.5-13.8 billion gallons versus the current 15 billion.

  • The agency is also reportedly going to make a separate recommendation to increase the blending mandates for 2022 above the previous two years.

  • If ethanol use is held at 10%, the advanced biofuel and biodiesel mandates would need to increase more than 1.2 billion gallons (over 36%).

FBN’s Take On What It Means: The inability to meet the current mandate increased the cost of compliance and led to lawsuits seeking relief from refiners. Meeting the biodiesel and advanced biofuel mandates has been less difficult due to minimal restrictions on blending limits and the growth in renewable diesel. Unless gasoline consumption increases beyond pre-COVID levels or blend rates increase via more E15 production, ethanol production could suffer over the next two years.

FBN

Pro Farmer Crop Tour Results

  • The 29th annual Pro Farmer Tour concluded last Thursday and national results were released Friday.

  • The PF tour projected the 2021 US corn yield at 177 bushels per acre compared to the USDA at 174.6 and FBN at 174.2. (See Chart)

  • Crop scouts saw better potential in Iowa and Minnesota corn yields than the August USDA report.

  • Crops in the eastern Midwest are expected to offset decreases in the west and keep national yields higher.

  • The crop tour forecast the 2021 bean yield at 51.2 bushels per acre versus the USDA at 50 bushels and FBN also at 51.2.

  • Scouts recorded pod counts below last year in Indiana and Minnesota, and finishing rains are needed to realize the larger yield estimates.

FBN’s Take On What It Means: Crop tour yields and pod counts are best compared against those from previous tours, because there are sampling biases in certain states based on the parts of the state that the routes cover. While the tour corn forecast is below trend yields, records in Iowa, Illinois, Indiana and Ohio along with smaller decreases in the west keep the projection above the USDA. There is still weather risk for beans where the western Belt is forecast to receive good rainfall in the coming week while areas in the east are drier.

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