Blending biodiesel can provide economic benefits for truckstop and travel plazas, and many factors help determine the market dynamics. Myself and my colleagues at NATSO's Alternative Fuels Council presented a webinar digging into biodiesel's blending economics.
Watch our eight-minute presentation on the blending economics of biodiesel below.
Here are a few important notes from the presentation:
As a market participant, it is helpful to have a macro understanding of what is going on in the RIN market. RINs (Renewable Identification Numbers) are created when qualified renewable fuel producers make a biodiesel wet gallon.
The EPA has mandated that “Obligated Parties” (most refiners/importers) meet certain renewable fuel volume obligations based on their production. Since most refiners do not make or buy renewable fuels, they must purchase RINs from those that do blend renewable fuels, such as biodiesel, ethanol and renewable CNG.
Changes in the market change the price of RINs. During the presentation, Steven Hove outlined several specific events that have led to price fluctuations throughout 2020.
In late January 2020, the 10th Circuit Court ruled against the EPA’s handling of small refinery exemptions. “This drove the demand for RIN prices up because it would lead to refineries not receiving their exemptions, causing obligated parties to have to buy more RIN credits,” Hove said.
In early March 2020, the COVID-19 outbreak led to a huge drop off with fewer people traveling and decreased fuel demand. Also, in March, the White House discussed the potential appeal of the Circuit Court decision.
As Jeff Hove shared during the presentation, “Around late May, there were rumors the EPA may cease the small refinery exemptions, which caused a spike. Not long after that, on June 18, they added 52 new gap-year SRE petitions to the RFS Dashboard despite the 10th Circuit Court ruling. It is all very speculative, and it is hard to play the market. It is all about how quickly you can react to current events.”
Operators can also see price differences based on state incentives. The Alternative Fuels Council can help operators find available incentives.
Despite the potential for market fluctuations, operators can get a general idea of potential economic benefits with the Alternative Fuels Council’s calculator that helps operators compare biodiesel margins to their diesel margins.
Contact the Alternative Fuels Council today to get an update on the current RIN market, a demo of our RIN Management system and/or how you can start realizing the benefits of blending renewable fuel! https://www.
// I recently came on NATSO’s podcast to talk about Biodiesel Fundamentals for Truckstops. Click here to listen to the episode of The Truck Stops Here.
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