Laurence J. Norton Chair of Agricultural Marketing, University of Illinois
Economic theory says that once renewable diesel + FAME biodiesel production goes over the RIN cliff the theoretical lower bound on the D4 RIN price is zero. However, this cannot be a stable long-run equilibrium, otherwise no renewable diesel would be produced (market clearing quantity is zero without policy incentives). So, the question can be framed as, roughly, what D4 RIN price is needed to incentivize around 4.5 billion gallons of renewable diesel + FAME biodiesel supply per year? I can believe that 40 cents is close to the minimum value needed to do the job.
RIN values have life after all. But, the question is: Is this a temporary pause, or have RIN values finally found an equitable level at which the industry is willing to own them? As one of Mike Myers characters on SNL often said....... "discuss among yourselves."
Water Resources Engineer and Energy Manager
6moKind of looks like its just bouncing off a D4 resistance level in the chart which could be purely speculation that value down the road will be higher since they can be banked.