U.S. renewable fuel credits surge to at least 7-yr high: traders

Source: By Stephanie Kelly, Reuters • Posted: Sunday, January 31, 2021

NEW YORK (Reuters) – U.S. renewable fuel credits climbed on Friday to their highest level in at least seven years, traders said, on higher crop costs and as the market bets on a renewable fuel push from President Joe Biden.

U.S. renewable fuel (D6) credits for 2021 traded at $1.13 each on Friday, traders said, the highest since at least 2013, the earliest recorded data on Refinitiv Eikon. Biomass-based (D4) credits traded at $1.17 each, highest since 2016.

Biden entered office with promises to increase use of cleaner fuels, while also throwing his support behind the Renewable Fuel Standard, a regulation that requires refiners to blend biofuels into their fuel mix or buy tradable credits, so-called RINs, from those that do.

Refiners can opt out of the requirements if they can prove the obligations cause them financial harm. The Trump administration greatly expanded the exemption program, a move that Biden criticized.

D4 credits have been climbing over the last month in part because of increased prices for soybeans, Reuters previously reported.

Rising corn and soybean feedstock costs, as well as Biden’s regulatory agenda, have led RINs to trade higher, investment bank Tudor, Pickering, Holt & Co said in a note on Friday.

Reporting by Stephanie Kelly; Editing by Sonya Hepinstall