Interesting announcements from an unexpected source show that the nation’s trend for renewable fuels may be with LCFS programs instead of RFS.  This is an idea The Jacobsen had been advancing for a while, but having that idea mentioned in an earnings call by a merchant refiner was not expected.

Coming on the heels of the 10^th Circuit Courts ruling that small refinery exemptions were inappropriately giving to three refiners, one CEO of a well known publicly traded oil company, announced that his company will need to find additional means to mitigate RIN exposure. He went on to say that LCFS programs like the ones found in California and Oregon are probably going to overtake the United States at some point and be the norm.  Between the recent Court ruling and the continued strength of LCFS programs, merchant refiners are being forced into capitulating from their historical stance on the RFS and looking for economic solutions to managing RIN exposure.

The CEO went on to say that in his opinion, RINs have nowhere to go but up. Since this particular company has excess of hydrogen production at two refineries, and the ability to convert selected existing desulfurization units to renewable diesel production, they are now in the early phases of possibly expanding to renewable diesel production and he feels they are well positioned to be at the front of the line as to opening up new RD production. He acknowledges that they are behind some of their peers and now needs to act quickly in order to protect assets that might be affected by the closing of the small refinery exemption loophole, and in an effort to mitigate future RIN liability.

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