Refiners may opt for RINs to meet US biofuel mandate – sources

08 February 2010 04:55  [Source: ICIS news]

GRAPEVINE, Texas (ICIS news)--Renewable identification numbers (RINs), the tradeable "currency" attached to renewable fuel production, might come into their own in 2010 now that US fuel blenders will be required to buy ethanol and biodiesel, sources said on Sunday.

RINs are the serial numbers that the US Environmental Protection Agency (EPA) attaches to each batch of ethanol and biodiesel produced in the US.

Blenders who are now mandated to buy up to 1bn gal/year of biodiesel by 2012 by the EPA’s new renewable fuel standards (RFS2) have the option of buying RINs instead of the physical fuel to meet that obligation, traders at the 2010 National Biodiesel Conference and Expo said. 

RINs had been selling on the open market for about 1 cent each during 2009, according to global chemical market intelligence service ICIS pricing.

As the EPA's mandate forces blenders to either buy the physical fuel or its RIN derivitive, biodiesel RIN costs could increase to equal the price of a gallon of biodiesel, sources arriving for the conference said. 

Pure soy methyl ester (SME) was assessed on 4 February at $3.01-3.21/gal (€2.20-2.34/gal) free on board (FOB) midwest, according to ICIS pricing.

"You could see some of the big blenders who didn't meet their (EPA) requirements in 2009 try to buy just the credits instead," said a trader who requested to remain anonymous because he wasn't authorized to speak to the media.

This demand for the RINs credit rather than the fuel itself has been considered an option for some blenders for years.

A biodiesel or ethanol blender might prefer buying RINs to actual fuel because RINs do not require the costs associated with shipping and the physical blending, according to John D Gelbard co-founder and CEO of the RINXchange, an online marketplace for the buying and selling of RINs.

"Refiners can get around blending renewables into gasoline themselves by purchasing excess RINs from refiners who have used more renewable fuel than was required of them," Gelbard wrote in an article explaining RIN transactions.

($1 = €0.73 )

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