RIN Risks: Using Supply and Demand Behavior to Assess Risk in the Markets for Renewable Identification Numbers used for Renewable Fuel Standard Compliance

Dustin J. Donahue and Seth Meyer

No 285310, 2010 Conference, April 19-20, 2010, St. Louis, Missouri from NCR-134/ NCCC-134 Applied Commodity Price Analysis, Forecasting, and Market Risk Management

Abstract: Congress has mandated that more biofuels be used over the next decade. To ensure compliance with the mandate, RINs are used to track biofuels that fuel blenders mix into motor fuels for domestic consumption. RINs may be traded, and the prices of RINs are affected by the ability of blenders and biofuel producers to comply with the mandate. There are four components to the mandate, one of which relates specifically to cellulosic biofuels, and the EPA has the authority to waive any or all components of the mandate. The purpose of this paper is to gain insight into the interactions between cellulosic biofuel technology and the mandate. To achieve this, the prices of RINs are simulated through the use of an economic model under scenarios varying both levels of technology and the enforcement or waiver of the cellulosic component. If the non-cellulosic components of the mandate are not waived, RIN markets are found to contain the effects that might otherwise be transmitted to crops markets. Higher levels of cellulosic biofuel technology are found to increase compliance costs in the presence of a mandate waiver but lower compliance costs if the mandate is not waived.

Keywords: Marketing (search for similar items in EconPapers)
Date: 2010-04
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/285310/files/confp04-10.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:nccc10:285310

DOI: 10.22004/ag.econ.285310

Access Statistics for this paper

More papers in 2010 Conference, April 19-20, 2010, St. Louis, Missouri from NCR-134/ NCCC-134 Applied Commodity Price Analysis, Forecasting, and Market Risk Management
Bibliographic data for series maintained by AgEcon Search ().