US bill may shift global bio-bunker demand to US

Global bio-bunker demand could shift to the US Gulf coast if the lawmakers pass a bill allowing ocean-going vessel operators to buy biodiesel in the US without forcing the retirement of associated renewable identification number (RIN) credits.

The bipartisan "Renewable Fuel for Ocean-Going Vessels Act", introduced this month in the US Senate, is a companion bill to legislation introduced in the US House of representatives in October 2023.

RINs are credits produced and traded by US refiners and importers to show compliance with the EPA's Renewable Fuel Standard (RFS) program. RINs currently cannot be used for RFS compliance if the corresponding physical volume of biofuel is burned outside the US.

Refiners and blenders are currently required to retire RINs from biodiesel and renewable diesel burned by ocean-going vessels operating in international waters, including the Great Lakes. The proposed bill would expand the RFS definition and allow ocean-going vessel owners to either sell the biodiesel associated RINs or purchase biodiesel at a RIN-discounted price.

If the bill becomes law, biodiesel for bunkering in the US Gulf coast would likely become cheaper than biodiesel for bunkering globally. Houston B30 bio-blend, comprised of RIN-less biodiesel and very low-sulphur fuel oil (VLSFO) would have been priced at $702/t average in February, or $59-$116/t cheaper than biodiesel blends sold in the bunkering hubs of Amsterdam-Rotterdam-Antwerp (ARA), the west Mediterranean and Singapore, Argus data showed (see chart). By comparison, the same Houston B30 blend comprised of biodiesel with the value of RINs included would have been priced at $857/t in February, a $40-$96/t premium to competing global ports.

By Stefka Wechsler

Global bio-bunker VLSFO blends, dob, Feb 2024 $/t