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REG Resurgence Thanks to LCFS

May 7, 2013 in Biodiesel, Biofuels, Companies by Rich Piellisch  |  No Comments

With Low Carbon Fuels Standard, Biodiesel Begins to Pay in California

The Iowa-based Renewable Energy Group is coming off of its best-ever quarter, with volumes up 14% and net income better than tripled, and sees even better times ahead as LCFS, California’s low carbon fuels standard, takes full effect.

Among the Renewable Energy Group's moves to bolster its business is an agreement with Maxum Petroleum for additional terminal capacity in Long Beach, Calif.

Among the Renewable Energy Group’s moves to bolster its business is an agreement with Maxum Petroleum for additional terminal capacity in Long Beach, Calif.

“The low carbon fuel credits are starting to provide meaningful value,” says Eric Bowen VP of corporate business development and legal affairs. “We’re seeing volume as a result,” he says.

“We’ve seen a significant change in people’s acceptance of higher blends,” Bowen says, and “increasing demand from fleets across the country.”

REG Avoids Food-Based Feeds

REG, which makes biodiesel from inedible (non-food) corn oil, recycled cooking oil, and animal fats, sold 39 million gallons of product during the first quarter of 2013, up 14% compared with the first three months of 2012.

Net income for REG (NASDAQ:REGI) rose to $46 million from $14 million for the first quarter of 2012.

“We’ve seen a dramatic increase in REG sales,” says Jon Scharingson, executive director for sales and marketing.

“This was our strongest first quarter ever for production and gallons sold,” said REG president and CEO Daniel Oh said in a release. “Biodiesel demand is being driven by a number of positive factors including the 2013 RVO and biodiesel’s ability to meet certain advanced biofuel targets that are not being fulfilled by imported sugar cane ethanol.”


RVO is the EPA’s renewable volume obligation. Oh also credited the reinstated federal tax credit for REG’s upsurge. “We are optimistic about industry conditions for the months ahead, and are taking concrete actions to capitalize on them,” he said.

REG is securing additional terminal capacity in Southern California to ease delivery of biodiesel to fleets. And, just this month REG said it would invest $16.6 million in a 30-million-gallon-per-year Soy Energy biorefinery in Mason City, Iowa.

According to Bowen, “2013 is shaping up to be the best year that California biodiesel has ever had.”

“What you’re going to see,” he told F&F, “is a sea-change.”

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Source: Renewable Energy Group with Fleets & Fuels interview 

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