MOSCOW (MRC) -- US renewable fuel credits hit fresh multi-year highs this week, while an oil refining trade group urged the Biden administration to use its authority to help stabilize the market, reported Reuters.
Prices for so-called Renewable Identification Numbers, or RINs, have climbed all year as costs for feedstocks such as soybean oil increase and as market participants bet on reduced exemptions granted to oil refiners that would waive them from US biofuel blending requirements.
Under the US Renewable Fuel Standard, refiners must blend billions of gallons of biofuels into their fuel mix, or buy tradable RINs from those that do. Refiners can apply for exemptions if they can prove the requirements do them harm.
The American Fuel & Petrochemical Manufacturers group argued in a letter dated Monday to the Environmental Protection Agency that uncertainty around blending obligations for 2021 - which have been delayed since a Nov. 30 deadline - have contributed to rising RIN costs.
The group said high RIN prices were threatening the viability of refiners already devastated by the coronavirus pandemic's effect on fuel demand.
Renewable fuel (D6) credits for 2021 traded at USD1.43 each on Monday, highest since at least 2013, according to Refinitiv Eikon data. Biomass-based (D4) credits traded at USD1.50 each, highest since at least 2014. They were both slightly lower, at USD1.41 and USD1.48, respectively on Tuesday.
AFPM has previously argued that small refineries generally cannot blend renewable fuels themselves and have to purchase RINs in the spot market. Still, EPA said in a 2017 document that obligated parties, including small entities, generally recover the cost of acquiring RINs through higher sales prices of products they sell.
"We have to admit the possibility that the world changed a lot and maybe it's been harder to pass through with the demand reductions we've seen ... but until I see concrete evidence of that, the best evidence we have is pre-pandemic studies," said Scott Irwin, an agricultural economist at the University of Illinois.
In its letter, AFPM also asked EPA to finalize proposed extended compliance deadlines for the RFS, and urged the agency to consider the demand destruction from the pandemic as it decides blending requirements for 2021.
As MRC informed earlier, in January 2021, the US Environmental Protection Agency (EPA) granted three waivers to oil refiners that exempt them from US biofuel blending obligations, a last-minute move before President Donald Trump left office. The agency granted two waivers for the 2019 compliance year and one waiver for the 2018 compliance year. The announcement followed four years of controversy around the waiver program under the Trump administration, but left many questions unresolved. Some 30 waiver requests remain outstanding for 2019 and 15 for 2020, which the incoming administration of Joe Biden will need to deal with.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.
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