Disconnect Between Biodiesel and Ethanol RINs

The RINs market is providing notice that it expects a change in RVO’s moving forward.  Biodiesel and ethanol RINs have been tightly paired in price since late in 2020. The price spread between the two RIN classes had been as narrow 10 cents or less for many weeks throughout 2021, and as low as three cents.  This was an indication that increased biomass-based diesel demand was going to be needed to cover any shortfall within ethanol blending requirements.

The spread between the RIN classes began to widen in July and has accelerated over the past several weeks.  The spread in pricing between the 2021 biodiesel and ethanol RINs widened to 31 cents on Tuesday before Reuters released its article speculating that the 2020 mandate would be reduced and the 2021 mandate would be lower than anticipated.  After the report, the RIN spread widened another 4.25 cents to 35.25 cents.  This has…