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Energy Ethanol US

Export data forces EPA biofuel mandate rethink

US ethanol producers are set to wring some small consolation from EPA after their disappointment at May’s little changed US ethanol blending mandate revision. EPA has conceded that departmental distrust over Census Bureau data sets led it to erroneously exclude undenatured ethanol exports from its mandate-setting methodology based on a calculation of the available supply of renewable fuels. As a result, EPA looks set to revise its overarching 2014 renewable fuel blending mandate upward to the tune of 350mn gal, bringing the effective 2014 final blending obligation from 13.25bn gal to 13.6bn gal, according to the US Renewable Fuels Association. If built intact into November’s final rule on the Renewable Volume Obligation (RVO), the shift will effectively eat into the oversupply of banked 2014 RINs eligible for retirement two years forward from their issue vintage.

Despite monthly federal Trade Commission data to the contrary, EPA based its preliminary 2014 RVO calculation on the assumption that it was “unlikely that ethanol producers were engaged in direct export of any significant quantity of undenatured ethanol” given that most ethanol producers are located far from the coasts and incentivised to denature their product. In fact, US exports of undenatured ethanol for fuel use came close to matching exports of US-produced denatured fuel grade ethanol last year.

In the first five months of this year US exporters shipped 808mn litres (213mn gal) of undenatured ethanol overseas, greatly outstripping the 563mn litres of denatured fuel grade ethanol sold to overseas buyers. South Korea and the Philippines were the dominant sources of demand for US-produced undenatured fuel grade ethanol between January and May, repeating the export patterns seen last year.

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