Seth Meyer FAPRI-MU () University of Missouri Breimyer Seminar Columbia,

Seth Meyer (meyerse@missouri.edu)FAPRI-MU (www.fapri.missouri.edu)

University of Missouri

Breimyer SeminarColumbia, MOMay 27, 2010

0

20

40

60

80

100

120

140

160

0

1

2

3

4

5

6

7

8

Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10Do

llars

per

bar

rel

Dolla

rs p

er b

ushe

l

Corn Petroleum

Corn price is nearby futures price. Petroleum price is for West Texas Intermediate. Sources: USDA’s Agricultural Marketing Service and Energy Information Adm.

Overview of major biofuel policies influencing biofuels

FAPRI biofuel outlook

Effect of expiration of credits and tariffs on the biofuel market

Renewable Identification Numbers (RINs) are used to ensure compliance with the RFS. Obligated parties get required RINs by using biofuels or by buying RINs from others who have used biofuels in excess of their obligations.

Biodiesel blenders credit of $1.00 per gallon Expired December 31, 2009

Ethanol blenders credit $of 0.45 per gallon Expires December 31, 2010

Ethanol import tariff of $0.54 per gallon* Expires December 31, 2010

Cellulosic ethanol producers/blenders credit $1.01 per gallon Expires December 31, 2010

*Specific quantities of ethanol from CBI countries are exempt, an additional 2.5% specific tariff is applied to all imports

Source: 2010 FAPRI Missouri stochastic baseline

Source: 2010 FAPRI Missouri stochastic baseline

0.000.501.001.502.002.503.003.504.00

Jul 05

Jan 06

Jul 06

Jan 07

Jul 07

Jan 08

Jul 08

Jan 09

Jul 09

Jan 10

Jul 10

Dol

lars

per

gal

lon

Unleaded Gasoline Ethanol

Source: 2010 FAPRI Missouri stochastic baseline

Source: 2010 FAPRI Missouri stochastic baseline

Source: 2010 FAPRI Missouri stochastic baseline

Biodiesel blenders credit of $1.00 per gallon Expired December 31, 2009

Ethanol blenders credit $of 0.45 per gallon Expires December 31, 2010

Ethanol import tariff of $0.54 per gallon* Expires December 31, 2010

Cellulosic ethanol producers/blenders credit $1.01 per gallon Expires December 31, 2010

*Specific quantities of ethanol from CBI countries are exempt, an additional 2.5% specific tariff is applied to all imports

Source: 2010 FAPRI Missouri stochastic baseline

Source: 2010 FAPRI Missouri stochastic baseline

Source: 2010 FAPRI Missouri stochastic baseline

Source: 2010 FAPRI Missouri stochastic baseline

Source: 2010 FAPRI Missouri stochastic baseline

Interactions of larger cap and trade legislation with the Renewable Fuel Standard (RFS2)

New energy bill, farm bill or conservation bill

Mandate waiversCalifornia and NE-States establishing

their own renewable fuel programs

Multiple biofuel policies overlap and may have varying effects on biofuel and commodity markets depending on context

The blend-wall may be ‘taller’ than we assume

Second-generation biofuel growth is uncertain

More detail in the US Biofuel Baseline Briefing Book www.fapri.missouri.edu

T A

C

S

B

O

Mandates

T = overall mandateA = advanced mandateB = bio-based diesel mandateS = cellulosic mandate

C = conventional ethanol gapO = other advanced gap

Source: 2010 FAPRI Missouri stochastic baseline

Source: 2010 FAPRI Missouri stochastic baseline

Source: 2010 FAPRI Missouri stochastic baseline

Source: 2010 FAPRI Missouri stochastic baseline