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Biodiesel RINs storm into 2017

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D4 biomass-based diesel RIN generation reached another record high in December. A total of over 524mn D4 RINs or 342mn fuel gal were generated, up 39% MoM and 113% YoY. The D4 RINs generated in 2016 now account for over 110% of targeted full year consumption. This is well above the rate seen at the same time in 2015 and means the total carry over D4 RINs will reach 570mn RINs, hitting the maximum statutory 20% bank allowed to be carried. The D4 generation progress calculation includes banked RINs carried over from 2015 into 2016, and also assumes the market plans to carry 20% of the statutory mandate into 2017. It also counts a 35% annual decline in D5 generation in 2016 towards the D5 shortfall that D4s will need to plug.

December D4 RINs generated by importers and foreign producers hit 200mn RINs, up by around 79mn RIN gal, reflecting robust imports from all destinations and accounting for 38% of total RIN generation in December. The volume is up from importers’ 32% in November and 182% higher than the same period last year. In total, over 306mn gal of biodiesel was used to generate RINs, of which 98% went towards D4 generation, with the rest of the volume consumed in D6 output. 57mn gal of renewable diesel was consumed in RIN generation, up 3.5mn gal from the previous month.

D5 RIN generation meanwhile edged up subtly to 5.8mn RINs in December, reflecting little more than 17,000gal of imports added to December’s output, accounting for less than half a percent of generation. Total YtD generation through December satisfied just 18% of the D5 mandate set out in the RVO, keeping generation progress well below the level seen at the same time a year earlier. In 2016, total D5 generation was down 35.5% compared with the same period last year. No D5 RINs are expected to carry over from 2016 into 2017.

D6 RIN generators added 2.99% MoM to reach 1.296bn RINs in December, still representing a decline of 1.35% YoY. D6 RIN output reported last year reached 99.64% of total annual mandated demand, assuming a rational targeted 10% RIN carryover from 2016 into 2017. The actual carryover of D6 RINs from 2016 into 2017 amounts to 1.395bn gal, accounting for 9.6% of the total 2016 statutory mandate. Imported fuels consumed in D6 output were down 42% MoM, a drop mainly down to declining palm biodiesel imports.

D3 RINs reached only 91% of the statutory mandate, indicating a 53mn RIN shortfall instead of any carryover from 2016 into 2017. Total D3 generation in 2016 reached 177mn RINs, up over 24% YoY, although the higher 2016 mandate offset the rise. The shortfall in D3s can be fulfilled by a combination of waiver credits and advanced RINs.

TZ/MS – 19/01/2017

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