Volume 6, Issue 5
Published: June 22, 2012
US biodiesel spot trade slows in Q2

The economics for biodiesel in the US spot market are already challenging, one in which its cost can be nearly $2 (€1.60) per gallon more than that of petroleum-based diesel. The industry lost a $1 gallon tax subsidy at year-end 2011 that had previously narrowed the spread.


There were expectations the value of tradable federal compliance credits or Renewable Identification Numbers (RINs) would inflate to replace a portion of the lost tax subsidy thereby shrinking biodiesel’s premium. Initially that was the case, with 2012 biodiesel RIN values trading as high as $1.64 in January.


Those values eroded sharply into May, slipping below $1.30. Those RIN prices are not universal either, with smaller biodiesel producers collecting roughly $0.20 less for their credits due to fraud. So far, three major RIN fraud cases have been ferreted out by the EPA, the administrator for the Renewable Fuel Standard (RFS) and RIN programme, and more cases are expected.

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