US ELECTIONS: RINs rally on Biden's likely enforcement of biofuel mandate

Biofuel credits extended their week-long rally Nov. 9 on anticipation of stronger enforcement of US renewable fuel mandates and fewer refinery exemptions under a Biden administration, although prices could be nearing a peak.

D6 ethanol RINs for 2020 compliance traded up to 74 cents/RIN early Nov. 9 but backed off to an afternoon assessment of 70 cents/RIN, up 2.25 cents from the Nov. 6 assessment.

On Nov. 6, D6 RINs jumped to their highest level since early 2018 as Democratic nominee Joe Biden secured more ballots in tight battleground races. The credits were last higher in February 2018, before the Trump administration accelerated the use of small refinery waivers to the Renewable Fuel Standard.

US ELECTIONS: Biden declared winner of presidential race, faces challenges to energy agenda

Biden was named the presumed winner Nov. 7 after a widening lead in Pennsylvania put him over the top in electoral college votes.

During the Iowa Caucuses in February, a Biden spokesman called out President Donald Trump's use of "reckless waivers to big oil refineries," saying they undermined Iowa's ethanol industry and rural economy — costing good-paying jobs and billions of lost gallons of biofuel."

Rapidan Energy Group expects the Biden administration to be "more likely to implement the RFS as written," allowing the policy to play out until 2022 when statutory volumes run out. Rapidan then sees a Biden White House encouraging Congress to replace the mandate with a low-carbon fuel standard similar to California's.

ClearView Energy Partners expects Biden's Environmental Protection Agency to move quickly to set 2021 blending volumes, maintaining conventional and advanced biofuel requirements.

Uncertain 2021 volumes

Annual biofuel requirements are typically set by Nov. 30 of the previous year, but it remains to be seen if the Trump administration will release final volumes before leaving office.

The Trump administration proposed 2021 volumes in May, but it has yet to emerge from the Office of Management and Budget.

ClearView said Trump's EPA completing an RFS rulemaking in the 75 days before the Jan 20 inauguration would represent less than half the time of the fastest annual rulemaking process since 2016.

ClearView added that a Biden EPA may seek to "green" the RFS program by taking back up ideas considered during the Obama administration such as RIN multipliers for sustainably produced biofuels or crediting biogas-derived electricity used in transportation.

But given the delay to setting 2021 volumes and an "extensive agenda for EPA," ClearView predicted the Biden administration might wait until the 2022 mandate or future rulemakings to make such changes.

In May, EPA proposed requiring oil refiners and importers to blend 20.17 billion gallons of renewable fuel into the transportation supply next year, up 80 million gallons, or less than 1%, from this year's mandate. The draft would increase cellulosic biofuel blending by 80 million gallons to 670 million gallons, which would also raise the advanced biofuel mandate to 5.17 billion gallons.

That would keep the implied conventional ethanol mandate at 15 billion gallons, the same level it has been since 2017.