Analysis provides RIN outlook

By Staff | February 14, 2013

Iowa State University’s Center for Agricultural and Rural Development recently published a policy brief on the outlook for ethanol and conventional biofuel renewable identification numbers (RINs) through 2014. The brief, written by economics professor Bruce Babcock, addresses whether banked RINs will be used in 2013 to offset high production costs, or if banked RINs are likely to be held until 2014, when they could help offset low ethanol prices.

Babcock stressed that when the cost to an obligated party to use a banked RIN is less than the lost value for buying ethanol, it will use a RIN meet its obligation. This can cause ethanol use to decline and the price of RINs to increase.

According to Babcock, a significant portion of these banked RINs are expected to be used this year, due in part to the E10 blend wall and high ethanol production costs. However, the actual use of banked RINs will be highly dependent on this year’s corn yields, the use of sugarcane ethanol to meet RFS advanced biofuel targets, and the biodiesel mandate.