U.S. renewable fuel credits, known as Renewable Identification Numbers (RINs), climbed to multi-month highs on Friday due to increased demand from refiners facing compliance mandates and rising soybean oil prices. This unexpected surge in RIN prices came despite predictions that President Donald Trump's reelection might pressure the market downward.
RIN prices for biomass-based diesel (D4) and ethanol (D6) both rose as high as 79 cents each—the highest levels since January, according to traders. The U.S. Renewable Fuel Standard (RFS) requires fuel companies to blend a minimum volume of renewable fuels into the transportation fuel supply or purchase RINs as an alternative. This policy has been beneficial for biofuel producers, who rely on RIN prices to cover production costs, but it presents challenges for petroleum refiners whose profit margins have already been hit hard by weak demand and fuel oversupply.
There was speculation that Trump's administration might reinstate broader small refinery exemptions to alleviate RIN obligations, as exemptions were more common during his first term. “There's uncertainty around whether Trump will reintroduce widespread small refinery exemptions,” said Alex Hodes, an energy analyst with StoneX. This uncertainty may be prompting some refiners to buy RINs now, hedging against potential shortfalls.
Additionally, expectations for tighter fuel mandates and a possible reduction in RIN availability have added upward pressure on prices. Weak fuel demand has constrained blending, which could limit RIN availability in the coming year, said Will Faulkner, founder of Carbon Acumen.
Adding to the cost pressures, soybean oil prices have surged, partly on the possibility that Trump could impose tariffs on biofuel feedstock imports. Higher feedstock prices reduce profit margins for biofuel producers, pushing them to seek higher RIN prices to offset costs, according to Paul Niznik, director of energy at Capstone. As the market faces these intertwined challenges, refiners may be bracing for sustained volatility in renewable fuel credit prices.
