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US renewable fuel credits double since court decision on refinery waivers

February 12/2020

MOSCOW (MRC) -- US renewable fuel prices have doubled since a US appeals court in late January ruled that the Trump administration must reconsider three waivers it previously handed out to oil refineries that exempted them from biofuel blending laws, reported Reuters.

Renewable fuel (D6) credits RIN-D6-US for 2019 are trading at around 19 cents each, up from nine cents before the courtís Jan. 24 court decision, traders said. Refiners including Phillips 66 and Valero Energy Corp have actively bought in the market, two traders said.

Prices have steadily risen because the court decision raises the possibility of fewer small-refinery waivers going forward, creating higher demand for the credits, traders said.

Under the US Renewable Fuel Standard, the nationís oil refineries are required to blend billions of gallons of biofuels such as ethanol into the nationís fuel pool, or buy credits known as RINs from those that do. But the EPA can waive refinersí obligations if they prove compliance would cause them financial distress.

The Environmental Protection Agency under President Donald Trump has roughly quadrupled the number of waivers handed out to small refiners, angering the biofuel industry, which claims the exemptions hurt demand for corn-based ethanol. The oil industry rebuts that and says the obligations are too pricey.

According to the courtís decision, the EPA overstepped its authority to grant waivers in the past for HollyFrontierís (HFC.N) Woods Cross and Cheyenne refiners and CVR Energyís Wynnewood refinery because the refineries had not received exemptions in the previous year.

Market participants are awaiting clarity on how the EPA will address the courtís ruling. The court vacated the EPA orders granting the exemptions to the three refineries and sent the issue back to the EPA for further action.

Biomass-based (D4) credits RIN-D4-US for 2019 have also risen since the ruling, to 55 cents each from 45 cents each, traders said.

As MRC wrote before, US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers. The estimated PP consumption in the Russian market was 1,260,400 tonnes in January-December 2019, up by 4% year on year. Supply of almost all grades of propylene polymers increased, except for statistical copolymers of propylene (PP random copolymers).
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, PP random copolymer, propylene, ethylene, petrochemistry, Chevron Phillips, Phillips 66, Valero, Russia, USA.
Category:General News
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