EIA shows how RINs have soared this year

In Washington, the Energy Information Administration says prices of renewable identification number (RIN) credits—a compliance mechanism used for the Renewable Fuel Standard (RFS) program administered by the U.S. Environmental Protection Agency (EPA)—have remained high in 2022. So far this year, RINs generated by biomass-based diesel (biodiesel and renewable diesel) production, known as D4 RINs, peaked on April 28 at $1.91 per gallon (gal), and RINs generated by ethanol production (D6 RINs) peaked on June 7 at $1.68/gal, close to the high prices seen in 2021.

The first reason RIN prices increase is when the cost of a biofuel is higher than the petroleum fuel it is blended into. In this case, blenders sell the RIN at a higher price so that they can offset the costs of the more expensive feedstock and continue blending at levels suitable for RFS compliance. Rising global demand for the agricultural feedstocks used to make biodiesel fuels has made biodiesel more expensive than petroleum diesel, driving D4 RIN prices higher in 2022 and creating an incentive to blend biodiesel and renewable diesel.

At its peak on April 28, the U.S. Gulf Coast spot price for biodiesel reached $8.36/gal. Even when accounting for a $1.00/gal biodiesel tax credit that blenders receive for blending biodiesel, biodiesel spot prices were more than $3.00/gal more expensive than the $4.30/gal U.S. Gulf Coast spot price for ultra-low sulfur diesel. This difference has decreased slightly since then to $2.52/gal as of July 11 but remains a large enough difference that high D4 RIN prices are needed to drive enough blended fuel to meet the RFS targets.