Biofuel credit surplus could blunt RIN price impact from Trump moves - sources

By Stephanie Kelly NEW YORK (Reuters) - A big surplus of U.S. biofuel blending credits would likely blunt potential price increases in the market if the Trump administration follows through on its proposal to boost blending volumes mandates, four industry sources said

Reuters August 27, 2019 01:05:32 IST
Biofuel credit surplus could blunt RIN price impact from Trump moves - sources

Biofuel credit surplus could blunt RIN price impact from Trump moves  sources

By Stephanie Kelly

NEW YORK (Reuters) - A big surplus of U.S. biofuel blending credits would likely blunt potential price increases in the market if the Trump administration follows through on its proposal to boost blending volumes mandates, four industry sources said.

Prices for the credits known as Renewable Identification Numbers, or RINs, tanked this month after the Environmental Protection Agency decided to grant 31 biofuel waivers to oil refiners, exempting them from their obligation to blend ethanol into their gasoline.

The administration has since sought to quell anger over the waivers in the agricultural industry and is considering boosting next year's blending volumes mandates to compensate for the impact of the waivers, Reuters reported last week https://af.reuters.com/article/commoditiesNews/idAFL2N25J0V4.

While that move could help bolster demand for corn-based ethanol, its impact - especially on the RIN market - could be muted by a buildup in the so-called "RIN bank" over the past few years: There were 2.19 billion carryover RINS from 2018 for use for compliance in 2019, according to EPA estimates, compared to 2.59 billion for 2018, 2.22 billion for 2017 and 1.54 billion for 2016.

"Even if the EPA (Environmental Protection Agency) moves forward with some of the ideas being talked about, we wouldn't expect it to have significant impacts on RIN prices," said one industry source familiar with the matter, citing the size of the RIN bank.

Renewable fuel credits for 2019 traded at 15.75 cents apiece on Friday, far below 88.75 cents each two years ago. RIN prices have fallen due to the Trump administration's expansive use of the Small Refinery Exemption program, which allows refineries of less than 75,000 barrels per day to seek waivers from their blending obligations under the Renewable Fuel Standard. Under the RFS, refiners must blend certain volumes of biofuels or buy RINs from those that do.

Facilities can also carry over a percentage of RINs from previous years, which has led to the accumulation in the RIN bank.

After the decision to grant the 31 waivers caused an uproar in farm states, the president and his administration discussed ways to boost biofuel demand. One proposal is to lift the 2020 annual corn-based ethanol mandate by 500 million gallons and the biodiesel mandate by 250 million gallons.

(Reporting by Stephanie Kelly; Editing by Chizu Nomiyama)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.