Biodiesel Renewable Identification Numbers (RINs) for 2011 -- also called D4 RINs -- were stronger and more active Tuesday morning as they were heard traded at $1.30/RIN and $1.31/RIN, sources said, on the Environmental Protection Agency's Notice of Violation (NOV) to Green Diesel LLC, issued late Monday.
2011 biodiesel RINs were assessed by Platts on Monday at $1.22/RIN.
In its letter to Green Diesel, the EPA said it was investigating Green Diesel's compliance with the Clean Air Act in regards to fraudulent RINs. RINs are used to demonstrate compliance with Renewable Volume Obligations (RVOs). A credit-trading program allows obligated parties and exporters of renewable fuels to comply with RVOs through the purchase of RINs.
"Based upon the information available to EPA as a result of its investigation, EPA has determined that beginning at least July 16, 2010, through and including July 15, 2011, Green Diesel generated RINs with a D-Code of 4. EPA has determined that all RINs generated during this period are invalid."
Sources agreed that the effect of the NOV on the biodiesel RINs market would be a boost in 2011 biodiesel RIN prices and demand, as most of the Green Diesel RINs in question were produced in 2011.
One veteran ethanol trader said that the NOV "should push up [the] price of 2011 biodiesel RINs because the 60 million [RINs rendered fraudulent by the NOV] can be covered with either 2011 [RINs] or 2012 [RINs], so they'll target the cheaper 2011's till the price rises close to 2012 value."
"As long as they're below 2012 [biodiesel RINs], people will backfill with 2011 [biodiesel RINs]," said another biofuels trader.
Biodiesel RINs for 2012 were assessed by Platts on Monday at $1.4150/RIN, and were heard traded late Monday after the assessment window at $1.43/RIN.
There were no 2012 biodiesel RIN trades heard by Tuesday morning, but sources said they heard of offers at $1.45/RIN.
