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Fast August D4 RIN output leaves other RIN categories for dust

D4 biomass-based diesel RIN generation hit a new yearly high of over 398mn RINs (260mn wet gal) last month, up almost 85mn RINs or 27% MoM and up 40% YoY. The D4 RINs generated in the first eight months of this year now account for over 66% of targeted full year consumption. This is above the 63.87% rate seen at the same time last year. The D4 generation progress calculation includes banked RINs carried over from 2015 into 2016, and also assumes 2016 generation includes a 20% carry over into 2017, plus assumed 10% annual growth in D5 generation against the D5 shortfall that D4s will otherwise need to plug.

To beat the D4 full year target based on these assumptions, over 293mn RINs need to be generated going forward each month between September and December. D4 generators managed average output of just 244mn RINs in the same four months last year. Generators only need to increase their output by 20% YoY through the rest of 2016 to meet the combined D4/D5 target plus calculated carryover.

D5 RIN generation meanwhile maintained a steady pace at 16.96mn RIN gal in August, up 6% MoM. Total YtD generation through August has contributed just 14% of the D5 mandate set out in the RVO thanks to the huge mandates published for 2016, keeping generation progress well below the level seen at the same time last year.

D6 RIN generation edged up 4.82% MoM to 1.33bn RINs in August, representing similarly modest growth of 5.65% YoY. D6 RIN output reported so far this year has breached just 60% of total annual mandated demand, less than the 63.5% seen at the same time last year, assuming a rational 20% RIN carryover from 2016 into 2017.

Even more concerning than the D6 category, D3 RINs reached only between 45%-56% of targeted annual generation through August. MoM growth was small at just 2.76% to lift output to an unspectacular 15.63mn gal. The industry remains facing technical and investment limitations on physical capacity which threaten full year category compliance.

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