The value of certificates that track compliance with a U.S. law to use corn-based ethanol dropped the most since March on speculation Congress will adjust biofuel consumption targets.
Renewable Identification Numbers, or RINs, for ethanol made from corn slumped 18 percent to $1.03 at 10:51 a.m. New York time. It was the steepest decline since March 12, a day after the U.S. House of Representatives’ Energy and Commerce Committee held hearings on the Renewable Fuels Standard.
Lawmakers at the session, including Representative Fred Upton, a Michigan Republican and chairman of the committee, said modifications are needed to the law that calls for the use of escalating amounts of renewable fuels.
“You’ve got everyone from trade groups to Congress calling for a review,” said Michael Slider, director of business development at Fauser Energy Resources in Oregon, Illinois. “If there are any reductions, then the RIN values will obviously fall. You’ve got buyers that are wary.”
RINs rose to a record $1.43 on July 17 from 7 cents on Jan. 3, data compiled by Bloomberg show. Advanced RINs, which cover biodiesel and Brazilian sugarcane-based ethanol, were unchanged today at $1.30. They were at 37 cents on Jan. 7.
The 2007 energy law mandates that refiners use 13.8 billion gallons of ethanol this year and 14.4 billion in 2014. RINs are attached to each gallon of biofuel and can be traded or sold among refiners.
Oil companies have called for repeal of the law, saying that the targets would force them to sell gasoline containing ethanol beyond the previous 10 percent limit, and that more testing is needed to determine the effect that would have on engines.
Supporters of the biofuel argue that refiners should sell higher concentrations in gasoline, citing a 2011 Environmental Protection Agency ruling that allows for as much as 15 percent ethanol in the motor fuel for vehicles made after 2001.
The EPA this month sent the final rule for this year’s volume standards to the White House Office of Management and Budget for review.
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