Renewable Fuel Demand

Although industry is patiently waiting for the EPA to finalize and post federal renewable fuel mandate levels for 2014, seasonal demand for renewable fuels is picking up quickly.  Even CARBs announcement of suggested "curve smoothing" (temporary limits put on renewable fuel mandate levels) is having little impact on the demand and value of renewable fuels.  Renewable fuel blending is moving forward despite bureaucratic rule-making stagnation.  

 

As most blenders have seen, the RFS credit based program is working.  Margins continue to increase, and businesses are becoming more competitive due to the added value of the RIN credits.  In many parts of the Country, blending and credits are absolutely necessary to compete.  And those controlling the credits have financial advantages over those that are buying pre-blended product.

 

Unfortunately, the LCFS program will not likely be as successful until CARB rules allow downstream blenders to gain carbon credits on renewable fuels while allowing blenders to refuse the compliance obligations (regulated party status) for the refined gasoline and diesel.  The existing rules do not provide an incentive for downstream blending but they do create enormous risk (equipment compatibility and compliance enforcement) for any marketer that wishes to become a "Regulated Party" and offer higher blends of renewable fuel.

Under the RFS, RIN credits must follow the wet gallon to the point of blending with transportation fuel, heating oil, or jet fuel.  Once the blending has been established, the credit can be sold.  This process creates a true incentive for the downstream party to blend higher levels.  It also creates a scenario where the credit is monetized closer to the end-user of the fuel and may provide cheaper prices at the pump.  

 

Obligated Parties, under the RFS, have already contracted to buy 100% of the RINs (D4, D5, and D6) coming from RINAlliance blenders for 2014.

 

• Biodiesel (D4)$0.99
• Ethanol (D6)$0.51
• Advanced (D5)$0.61 - $1.03

 LCFS Carbon Credits  - $30.00/MT

 

The RINAlliance program is the only system designed strictly for marketers and blenders.  Our system was designed by our industry and for our industry.  We are actively on-boarding new marketers looking for a mechanism to decrease their cost of compliance while increasing revenue.  RINAlliance staff are also registered as CI Traders under the LCFS program.

 

For more information on how to get involved with the RINAlliance, and to see a free demonstration of the program, call 1-866-433-7467 or email us at info@rinalliance.com.