Commentary: Biodiesel could ease U.S. "blend wall"
Biodiesel could, in the future, ease so-called ethanol "blend wall" concerns facing the U.S. transportation fuel industry, whose capacity to blend corn ethanol in gasoline is nearing its physical limit.
The biodiesel industry has ample production capacity and has considerable feedstock flexibility while diesel fuel faces no looming blending limits.
Those advantages seem to assure a growing role for U.S. biodiesel in the long-term.
The debate on how to solve the near-term ethanol blend wall problem is polarised between continuing as normal (as supported by corn growers and ethanol producers) or temporarily waiving all or part of the ethanol mandate (supported by the refining industry).
It is unclear whether the implementing Environmental Protection Agency (EPA) has the authority to use biodiesel to head off the present problem, by substituting for corn ethanol.
Certainly it used biodiesel this year to make up for a shortfall in advanced, cellulosic ethanol.
And in the longer term, EPA has projected a rapidly rising role for biodiesel.
That may head off, or at least delay, a recurrence of future gasoline blending walls.
The expanded targets for biodiesel this year will represent about 2.9 percent of all U.S. diesel fuel, according to EPA, while all engine warranties allow at least 5 percent blends, and non-road uses allow much more.
The United States is nearing the point where the law requires the use of more ethanol than can be physically blended into gasoline at the most prevalent level of 10 percent ethanol.
A recent run-up in the price of compliance credits, or renewable identification numbers (RINs), suggests that a blend wall is nearing.
Refiners concerned that they will be unable to blend physical product can buy RINs instead on a secondary market to meet their obligation.
The RIN price spike has also increased the urgency to address the problem, because of possible knock-on impacts on refining costs and gasoline prices.
The medium-term solution is to supply a 15 percent blend, as authorised by EPA for vehicle models manufactured since 2001, but that will take time given industry resistance and an infrastructure lead-time.
The Energy Independence and Security Act in 2007 created expanded mandates for particular types of biofuel within a more general target, to drive a shift away from corn ethanol to less carbon-emitting alternatives which did not compete with food.
The main sub-category is "advanced biofuel" which excludes corn ethanol but includes almost everything else.
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