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International Area Studies Review
[ Article ]
International Area Studies Review - Vol. 28, No. 1, pp.49-61
ISSN: 2233-8659 (Print)
Print publication date 31 Mar 2025
DOI: https://doi.org/10.69473/iasr.2025.28.1.49

The Effects of U.S. Biodiesel Tax Credits and Its Uncertainty on the RIN Prices

Jong-Ik Kim* ; Wyatt Thompson
Korea Energy Economics Institute, Ulsan, 44543, Republic of Korea
University of Missouri, Columbia, MO, 65203, USA

Correspondence to: *Email: jikim@keei.re.kr

Abstract

The United States’ Renewable Fuel Standard (RFS) is a biofuel use mandate that is widely studied for its potential impacts on food prices and greenhouse gas (GHG) impacts. Another policy that affects biomass-based diesel fuel uses is a Biodiesel Tax Credit (BTC) that supports use, but has frequently expired and then been reintroduced with retroactive payments so RFS-BTC interactions are unclear. We investigate the pass-through of the biodiesel-diesel price spread and BTC to the prices of RFS compliance certificates (Renewable Identification Numbers, RINs). The RIN price theoretically depends on the price of fuels, such as biodiesel and diesel, as well as the BTC – if the BTC is in place or expected. Our estimated results shows that market participants’ responses to the uncertainty of BTC differ over time and are sensitive to the BTC status. These results raise questions about whether an inconsistently applied BTC in the context of a blend mandate encourages firms’ use of biofuel and, if that is the underlying goal, could question the program’s effectiveness. Results are relevant to policy makers who create the expire-and-revive BTC, regulators who set RFS targets, market participants, and societal goals regarding GHG emissions and goods’ prices.

Keywords:

Biodiesel tax credits, Renewable fuel standard, Renewable Identification Numbers

AI Acknowledgment

Generative AI or AI-assisted technologies were not used in any way to prepare, write, or complete essential authoring tasks in this manuscript.

Conflicting interests

The authors declare that there are no conflicts of interest in this research.

Funding

This material is based in part upon work supported by the U.S. Department of Agriculture, under Agreement No. 58-0111-24-015, and the USDA National Institute of Food and Agriculture, Hatch project number MO-C1537173. Any opinion, findings, conclusions, or recommendations expressed in this publication are those of the authors and do not necessarily reflect the view of the Korea Energy Economics Institute, U.S. Department of Agriculture, or the University of Missouri.

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