Economist analyzes RIN generation: 2014 pace will meet need

By Susanne Retka Schill | August 07, 2014

Analyzing the past six months of U.S. EPA reports on renewable identification number (RIN) generation, University of Illinois economist Nick Paulson suggests obligated parties don’t expect the EPA’s 2014 volumes to be as low as the EPA’s proposed levels. “These estimates suggest that the market does not expect finalized mandate volumes at original statutory levels. There may be some evidence that obligated parties are incentivizing RIN generation exceeding the needs implied by EPA's proposed rules,” he writes in his latest FarmDocDaily post

Paulson’ analysis includes a look at the 2013 RIN generation data, with an estimated total carryin of 1.875 billion RIN gallons, shown in the accompanying Table 1. “Estimates of D4 RIN carry-in suggest the 20 percent limit on rollover will be hit and there are 384 million D4 RINs from 2013 available for 2014 mandate compliance. The remaining balance of advanced RIN (D3, D4, and D5 categories) stocks will be determined by the final rulemaking for 2014.  Using the proposed rule advanced mandate level of 2.2 billion gallons, total advanced carry-in could be as low as 440 million gallons with the balance of 1.435 billion RIN gallons available for use towards the renewable mandate component.”

He also analyzed scenarios for RINs under the statutory levels as compared to the EPA’s proposed lower 2014 volumes, shown in the accompanying Table 2.  “If the mandate levels in EPA's proposed rulemaking for 2014 are upheld, the current pace of RIN generation suggests that a surplus of both advanced and renewable RINs will be available for carry-in to 2015,” he noted. “Examining a scenario at the original statutory mandate levels suggests a deficit of advanced RINs, a small surplus of D6 RINs, and an overall deficit to rollover into 2015.”