Fraud cases could boost RIN shortfall by 24 percent

Source: By Argus • Posted: Thursday, October 6, 2016

Houston, 5 October (Argus) — Recent biofuels fraud allegations could lead to more retirements of Renewable Identification Numbers (RINs) this year and a 24pc increase in the drawdown of banked credits, according to an Argus analysis of federal data.

As many as 108.7mn RINs may need to be retired this year to cover fraudulent activity under the Renewable Fuel Standard (RFS), according to court filings in a number of cases. This may mean this year’s draw on the supply of banked RINs could reach as high as 565mn credits, up 24pc from previous estimates of 456mn RINs based on an Argus analysis of August Environmental Protection Agency (EPA) RIN generation data.

EPA documents show the RIN bank likely stood at 1.74bn RINs as of 2014, implying this compliance year could see the RIN bank shrink by more than 32pc.

Late last week, the Department of Justice said that Chemoil had agreed to pay $27mn and retire 72.7mn RINs following accusations the company failed to retire RINs tied to biodiesel exports between 2011 and 2013.

A complaint filed this week by the EPA and Department of Justice against NGL Crude Logistics (NGL) and Western Dubuque Biodiesel could see the retirement of a further 36mn RINs this year.

Traders have noted an increase in RINs demand over the past month, with prices for biomass-based diesel D4 credits climbing 4¢ since the start of September. The spread between biodiesel and ethanol RINs reached as high as 13.25¢/RIN late last week, after starting the September trade month at 10.75¢/RIN.