Renewable identification number (RIN) credit prices ticked up slightly today following the re-election of Donald Trump and a likely Republicans control of the US Senate, but uncertainty remains for other biofuel-related markets and policies.
An increase in tariffs under Trump or other policy changes to deter biofuel feedstock imports could lower the availability of renewable fuels next year. Biomass-based diesel D4 and ethanol D6 RIN credits, which make up more than 90pc of all RINs generated on a monthly basis, rose slightly early Wednesday, following upward pressure from a rise in soybean oil futures.
The soybean oil-heating oil (BOHO) spread rose to its highest level recorded in 2024 at $1.21/USG on Wednesday. RIN prices for current year D4 and D6 rose to 70.75¢/RIN, with both posting 2.5¢/RIN in gains on the day.
While farm state lawmakers in both chambers are likely to resist any Trump efforts to repeal biofuels incentives, long-term prospects for the Inflation Reduction Act's "45Z" credit set to kick off in January are now uncertain. The incentive ends at the end of 2027, which gives Trump and his Republican allies substantial negotiating power over the terms of any extension — such as barring refiners from using foreign feedstocks.
The election results also mean a Trump administration will have the power to set new biofuel blend mandates under the Renewable Fuel Standard (RFS) for 2026 and subsequent years. The Environmental Protection Agency (EPA) during Trump's first term tried to strike a balance between refiner and biofuel interests, setting increasing volume mandates but issuing more waivers from program obligations.
While a second Trump term could be similar, regulators under the program's "set authority" now have more discretion to weigh various economic and environmental factors when setting volumes instead of tracking mandated volumes that lapsed after 2022. Federal judges weighing EPA's authority under this new phase of the program last week expressed concern about some of the agency's decision-making, meaning any court order to rethink or reset volumes would now fall to a Trump administration.
Under the Clean Air Act, which sets the framework for the RFS, refineries that process 75,000 b/d or less of crude have a pathway to waive biofuel blending obligations if they can prove they would suffer "disproportionate economic hardship." Precedent over these small refiner exemptions (SREs) affect the supply and demand balance of credits, which in turn alter the economics biofuel producers face as they rely on RIN credits as a source of revenue.
From 2017-2021, the first Trump administration dialed back environmental regulations and more generously doled out SREs. During that span of time, EPA also chose not to adjust the renewable volume obligations on larger refineries to account for those that had secured waivers. This helped create an oversupply of D4, D5, and D6 credits and drove prices down to more than five-year lows.
Cellulosic biofuel D3 credits in today's market also face a different set of parameters from the program's earlier years. The cellulosic waiver credit allowed producers to purchase waivers for D3 obligation given a shortage of RINs. But this mechanism changed under EPA's "set authority" and the Biden administration has brushed off a request from refiners to both lower requirements and make available waiver credits.
Current year D3 prices have risen as high as 350¢/RIN this year as a result as cellulosic biofuel production trails agency expectations. A Trump administration could be more sensitive to future industry requests to relax these requirements and could set less ambitious cellulosic targets for future blend mandates.
RINs are credits traded and produced by refiners and importers to show compliance with the RFS. Obligated parties can produce credits when renewable fuels are blended into conventional transportation fuels or can purchase credits from other RIN producers.
