Baby the RINs Must Fall

Thursday, 07/06/2023Published by: George Hoekstra

The Renewable Identification Number (RIN) has long served as the tool used to force renewable fuels like ethanol and soybean oil into the U.S. gasoline and diesel supply. A creation of the Renewable Fuel Standard (RFS), RINs act as a subsidy that enables the production of renewable fuels that would not otherwise be economically justified. RIN prices are set by the usual workings of supply and demand, but chatter has bubbled up recently in the renewable fuels ecosystem that prices for a particular variety of RIN could be headed for a crash. In today’s RBN blog, we explain what’s behind the talk about RIN prices.

RINs are a feature of the RFS, which requires certain minimum volumes of biofuels to be blended into fuel sold in the U.S. The required minimum is determined by the Environmental Protection Agency (EPA). RINs come in different categories with different names. This blog series focuses on the D4 RIN, which applies to bio-based diesel fuels made from soybeans and other bio-feedstocks. The D4 RIN (see Figure 1) is a virtual coupon that comes attached to each gallon of biodiesel or sustainable aviation fuel (SAF). It is detached by a blender when that gallon is blended with conventional diesel for use as fuel. The blender then redeems the coupon by selling it to petroleum fuel suppliers that are obligated to meet a biofuel supply quota each year. (See our Misunderstanding series and our Land of Confusion Drill Down Report for full explanations of how the system works.)

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