Tradable US biodiesel credits for the current year fell 5.5 cents/RIN Thursday to an assessment of 93 cents/RIN, the lowest level seen so far this year as sources said ample supply has put downward pressure on the biodiesel RIN market.
The US Environmental Protection Agency issues a Renewable Identification Number, or RIN, to track renewable fuel usage throughout the supply chain.
Refiners, importers and blenders -- 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, such as ethanol, it can buy RINs to satisfy the quota. The RIN serves the same purpose for biodiesel, but is biodiesel-specific.
Monthly biodiesel production for August, indicated in the biomass-based diesel (D4) category by EPA, was on a three-month decline as it decreased 5.5 million gallons to its lowest level since April, when it was at 98.677 million gallons, according to monthly data EPA released Thursday through the EPA Moderated Tracking System website (See story, 1553 GMT).
Although monthly biodiesel production shrank, sources said biodiesel RIN supply was abundant when year-to-date totals are considered.
"With the EMTS data, we are currently on target to meet our biodiesel mandate. So, in turn, there should be enough RINs to go around, so prices drop," said a biodiesel market source, adding that August biodiesel output was "lower than July, but, still, in the grand scheme, we are on our way."
EPA last year set at 1 billion gallons the Renewable Fuels Standard-2 mandate for biomass-based diesel production in 2012. The EMTS reported year-to-date biodiesel production for 2012 at 799.6 million gallons, about 80% of the total, with only four months left in the year.
