With RIN markets going wild, the status of available RIN stocks for use by obligated parties towards mandate compliance remains an important issue to regularly monitor. Available 2012 RIN stocks across the biodiesel, advanced, and renewable categories continue to remain close to 2.5 billion gallons, of which 2 billion gallons are D6 RINs which can only be used for compliance with the renewable portion of the RFS mandate. Today's post looks at 2013 RIN generation data from the EPA through the first half of the year to get a better sense of the likely use of current RIN stock levels in 2013 and carryout of RINs into 2014.
Table 1 above summarizes 2012 RIN generation, use, and current levels of availability across the three D codes based on data from EPA's Moderated Transaction System (EMTS). These numbers show virtually no change in available RIN levels since the previous update in June (available here). Since obligated parties have until the end of the compliance period to retire RINs for use towards the mandates, it is unlikely these numbers will change significantly until the end of 2013 or early in 2014.
Figure 1 reports renewable (D6) RIN generation relative to the monthly need implied by the renewable component of the RFS2 mandate (annual mandate level for each year divided by 12). Excess D6 RINs were generated throughout 2010 and 2011, leading to the stock levels currently available. Early in 2012, generation averaged very close to the implied need to meet the 13.2 billion gallon mandate level. RIN generation began to fall off as the impact of the 2012 drought set in early during the summer, and production levels continued to decline relative to implied mandate needs through March of this year. Since then, RIN generation levels have increased each month, again approaching mandate requirements in May and June.
Projecting average monthly RIN generation in 2013 (1.06 billion per month) through the last half of the year results in a total of 12.7 billion 2013 D6 RINs, or 1.1 billion gallons shy of the 2013 renewable mandate of 13.8 billion gallons. The use of available D6 stocks in 2013 to meet this shortfall would result in carryout levels of just under 1 billion gallons for 2014 when the renewable mandate further increases to 14.4 billion gallons.
If current RIN generation rates (just over 1.1 billion gallons per month) were maintained through the end of the year, total D6 RIN would reach approximately 13.3 billion gallons for 2013. This would still fall 500 million gallons short of the renewable mandate, but very close to what is estimated to be the E-10 blend wall. Renewable RIN generation and use for compliance beyond these levels would imply the need for increased utilization of higher ethanol blends such as E-15 and E-85.