Bioeconomy seminar
| Date/Time: | Thursday, 11 Apr 2013 from 3:40 pm to 5:00 pm |
|---|---|
| Location: | 0013 Curtiss |
| Cost: | Free |
| URL: | http://iowaepscor.org/energypolicyseminars |
| Contact: | |
| Phone: | 515-294-6998 |
| Channel: | Research |
| Categories: | Lectures Live Green |
| Actions: | Download iCal/vCal | Email Reminder |
Abstract
Record corn prices and high ethanol production costs in 2012 led to ethanol production levels that were below the level required by the Renewable Fuels Standard (RFS). Indeed, governors of several states requested EPA to waive the national volume requirements for the RFS. The EPA denied the waiver requests on November 2012. Since, some have called on Congress to repeal outright the RFS, saying that the mandates are unworkable. Looking forward, most analysts point out difficulties in meeting the RFS over the next few years due to the "blend wall" in particular; i.e., increasing mandates will encourage ethanol blending at higher levels on one hand; decreasing gasoline consumption by U.S. consumers and limited retail distribution of E85 and/or E15 restrict the potential use of ethanol in the current car fleet, on the other. Therefore, a question facing policy makers is: how workable will the RFS be over the new few years? Obligated parties signal one answer to that question by buying or selling Renewable Identification Numbers, or RINs. RINs are certificates that individual gasoline and diesel producers and/or importers use to demonstrate compliance with the RFS. Obligated parties can buy or sell RINs or hold RINs for future compliance. When mandates are difficult to meet, RIN prices rise; and when mandates are relatively easy to meet, RIN prices approach zero. It should be the case that if the mandates are indeed becoming more difficult to meet over the next few years, the prices for RINs should rise to reflect expected compliance costs. We use a medium-run simulation model to conduct sensitivity analyses across important parameters that underlie implied RIN prices for the various components of the RFS. In particular the model is used in conjunction with government estimates of next year's corn, soybean, ethanol, and biodiesel production and consumption to investigate which factors underlying RIN prices are the most important.