Trump election sets biofuel stock plunging, uncertainty about future policy

US President-elect Donald Trump’s victory in the country’s presidential election sent biofuels shares tumbling on Wednesday, while propping up oil refiners’ stocks.

Shares of US independent refiners jumped, including CVR Refining, which saw the largest upturn (26% to $8.55) in its share prices in the company’s history.

Renewable fuel producers, such as Green Plains and Renewable Energy Group, took a dive, along with the renewable identification number (RIN) prices.

Investors are speculating that the Trump victory might bring further upset to US biofuel market, as he might seeks to change the Renewable Fuel Standard (RFS) to get rid of the RIN compliance credits.

Oil refiners have long opposed the costs of compliance with the Environmental Protection Agency (EPA) programme, and in September Trump campaign said he would look into abolishing the system of buying and selling biofuel blending credits.

However, the statement has since then been retracted, and according to Bloomberg Trump himself has said he supports ethanol.

The President-elect has received congratulations and approval from the US biofuels industry.

The RIN system has few friends within the oil refiners, and people such as Carl Icahn, owner of CVR Refining, has repeatedly called for its elimination.

"The government shouldn’t be going in and deciding what business should go out of business as the EPA does in the refineries," Icahn told Bloomberg TV. "They should not be doing that, but they should be going in and helping you in a lot of ways."

The Trump administration could use waivers to reduce costs for refiners to comply with the programme, said Timothy Cheung, VP at ClearView Energy Partners in Washington.

“Donald Trump’s victory increases the odds that the RFS will be reformed,” Rob Barnett, an analyst at Bloomberg Intelligence in Washington, said. “Trump spoke favourably of the RFS during his campaign, but many Republican lawmakers in Congress have been pushing both repeal and reform bills.”

This article was written by Ilari Kauppila, deputy editor at Biofuels International