Renewable identification numbers (RINs) continued their multi-day rally Dec. 4, with current-year D4 RINs trading at $1/RIN for the first time since December 2017.
S&P Global Platts assessed 2020 D4 RINs at $1.0025/RIN Dec. 4, above a $1.00/RIN bid and up 3 cents from Dec. 3.
A rally in CBOT soybean oil futures spurred much of the rally, as the biodiesel feedstock rose to its highest level since June 2014, with intraday trading as high as 39.25 cents/lb after a Dec. 3 settlement of 38.68 cents/lb.
Biodiesel and renewable diesel, both commonly produced from soybean oil, are the two largest generators of D4 RINs. Traders for both fuels use D4 RINs to offset moves in feedstock prices, leading to a sharp increase in RIN prices.
The US Environmental Protection Agency issues a RIN to track renewable fuel usage throughout the supply chain. Refiners and importers, called "obligated parties," use them to show the EPA that they have fulfilled their mandated government use of renewable fuels. If the obligated party has not used enough physical product, it can buy RINs to satisfy the quota.
Platts calculates the per-gallon cost of complying with biofuels mandates, or renewable volume obligation, by combining the various RIN categories, or D-codes, and the mandates for each category.
The current-year RVO reached its highest level since December 2017, climbing 0.23 cent/gal to 9.2005 cents/gal Dec. 4.
Both the oil and biofuels industries have cried foul over the EPA's failure to announce 2021 biofuels blending mandates by a statutory deadline Nov. 30. The lack of mandates has left companies uncertain of how to position their RIN holdings.
With no announced timeline for the release of the mandates, market participants have prepared for several months of uncertainty.
