RINs weaken after US Supreme Court decides to consider 10th Circuit SRE decision

Source: By Josh Pedrick, S&P Global • Posted: Tuesday, January 12, 2021

Houston — Prices for Renewable Identification Numbers (RINs) tumbled Jan. 11 following the US Supreme Court’s decision to take up an appeal of the 10th US Circuit Court of Appeals’ January 2020 decision that would limit the number of small refinery exemptions the Environmental Protection Agency could grant.

“I know I wouldn’t be buying 80 cents/RIN plus with SCOTUS hearing the SRE cases,” said one source. “If SCOTUS leans in the refineries’ favor, these people bought all these sky-high prices.”

The Supreme Court released orders on Jan. 8 showing it had granted a writ of certiorari in the case, setting the stage for oral arguments in the coming months.

The 10th Circuit ruling had said EPA would only be able to grant small refinery exemptions to refineries that had received a previous exemption. Refiners appealed the decision, with biofuels industry groups filing groups opposing the appeal.

Few people had expected the Supreme Court to take up the case, so the news caught many in the market by surprise.

D6 RINs for 2020 compliance tumbled 10.75 cents from Jan. 8, assessed at 76.75 cents/RIN.

Under the federal Renewable Fuel Standard, a refinery with less than 75,000 b/d of crude throughput can petition for an exemption from biofuel blending mandates if compliance would cause severe economic harm.

The oil industry praised the exemptions as a means of alleviating compliance costs while biofuels proponents criticized the EPA’s granting of the exemptions as excusing refineries from following the law.

Exemptions are typically granted for past years, leading to more pressuring on 2020 RINs than on 2021 credits.

An afternoon report from Reuters that the EPA would grant several 2019 exemptions before the Biden administration takes office also weighed on values.