RFS2 start date sees high biodiesel RIN prices

By Ron Kotrba | June 15, 2010
Posted July 1, 2010

Biodiesel RIN credit prices were high as July 1-the date RFS2 goes into effect-approached. According to Atlas Commodity Markets' daily pricing update as of June 30, the 2010 biodiesel RIN bids were up to 50 cents, while offers stood at 55 cents.

Wayne Presby, a managing partner with White Mountain Biodiesel LLC in Haverhill, N.H., said the high biodiesel RIN credit prices were reassuring for him in these times without the $1 per gallon federal tax credit. White Mountain Biodiesel, a 5.5 MMgy biodiesel plant, has been under construction for approximately a year and a half, and Presby told Biodiesel Magazine on July 1 that construction is finally complete and the plant is undergoing commissioning along with IRS and U.S. EPA registrations. The plant's fuel, which is made from waste greases, is meeting ASTM quality specifications.

Clean Fuels Clearinghouse and RINSTAR founder Clayton McMartin said with type B biodiesel RINs, it is economics 101 with price driving the supply and demand balance."RFS2 has set the demand-the lack of the tax credit has reduced supply," McMartin said. "The RIN credit price will continue to increase until the obligated parties have acquired sufficient RINs to meet this year's mandate. Void of the tax credit, if the RIN price gets high enough then more production will come back online."

McMartin, who recently co-authored a white paper on RFS2, mentioned a longer term problem-the volatility in the market for biodiesel producers.

"Much of that rests in the fact that obligated parties only have to demonstrate compliance at the end of the year," he said. "This dynamic undermines the efficiency that the producers would need in order to know they can count on the RIN component in the overall value for their product and, therefore, develop longer range operating plans."

Without the stabilization of quarterly reporting, violent swings in RIN prices may be a new normal, McMartin told Biodiesel Magazine. "The swings are certainly not to the advantage of the producers-or the refiners for that matter."
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