In-brief analysis
June 10, 2026
Data source: Bloomberg L.P. and the U.S. Bureau of Labor Statistics
Note: RIN=renewable identification number; real prices are adjusted to May 2026 dollars.
Compliance credits for biomass-based diesel and ethanol have doubled in value since the start of this year. The credits, known as renewable identification numbers (RINs), have increased in price, mostly because of higher U.S. biofuel blending targets. The combination of high RIN prices and rising motor gasoline and diesel fuel prices has created an especially favorable market for producing and blending biofuels.
RINs are credits generated when biofuels are produced or imported and are used to comply with the Renewable Fuel Standard (RFS) program. Under the RFS, the U.S. Environmental Protection Agency (EPA) sets annual renewable volume obligations (RVOs) for the minimum volume of biofuels that must enter the U.S. fuel supply. Obligated parties—petroleum refiners and motor gasoline and diesel importers—comply either by blending biofuels into petroleum-based fuels or by purchasing RIN credits.
As of June 4, biomass-based diesel (D4) RINs traded at $2.41 and ethanol (D6) RINs traded at $2.37, both close to their all-time highs set in 2021. Because one gallon (gal) generates 1.5 RINs for biodiesel and 1.6 RINs to 1.7 RINs for renewable diesel, these fuels currently generate more than $3.50/gal of credits. A gallon of fuel ethanol generates 1.0 credit.
RIN prices increased in 2026 primarily because of higher blending mandates. On March 27, the EPA announced the final RFS rule for 2026 and 2027, establishing significantly higher RVOs than in 2025. RIN prices increase with high RVOs to reflect the higher profit margins biofuel producers need as incentive to produce enough fuel to meet mandates.
Higher prices for petroleum products make fuel ethanol relatively more attractive to blend into gasoline. Relative to motor gasoline prices, the U.S. Gulf Coast fuel ethanol price, adjusted for energy equivalence, has been lower most days since mid-March. The higher RIN value that blenders using ethanol can then sell on the open market to companies that need to remain in compliance also incentivizes more blending into gasoline. The fuel ethanol discount to gasoline has been more than $2/gal in May and June when adding in the higher RIN value.
Data source: Bloomberg L.P.
Note: RIN=renewable identification number; the ethanol discount to gasoline is calculated as (2/3 * Gulf Coast spot gasoline price) – (U.S. Gulf Coast spot ethanol price – D6 RIN price). The gasoline price is multiplied by 2/3 to equate it to ethanol’s energy content.
High RIN values have also supported production and blending margins for biodiesel and renewable diesel. The difference between soybean oil and heating oil prices, the Bean Oil-Heating Oil (BOHO) spread, reflects the profitability of blending biodiesel and renewable diesel without incentives. Typically, RIN prices move with the BOHO spread to maintain margins. However, when RIN values increase relative to the BOHO spread, as they have done in 2026, profit margins for producing biodiesel and renewable diesel generally improve. The rapid increase in RIN values relative to the BOHO spread in 2026 suggests that the new RVOs are a significant driver of increased RIN values and that biodiesel and renewable diesel production margins are much higher than in 2025.
Data source: Bloomberg L.P.
Note: RIN=renewable identification number; the Bean-Oil Heating-Oil (BOHO) spread is calculated using front-month futures prices of soybean oil and heating oil. The biomass-based diesel (D4) RIN value is based on the RIN value times 1.6. Changes in federal tax credits and state credit values are also among factors that affect biomass-based diesel margins.
We forecast record-high production of fuel ethanol and renewable diesel in 2026 because of high blend mandates, high gasoline and diesel prices, and increasing production capacity at biofuel plants. Biodiesel production also increases, although we have it remaining below record highs because of lost production capacity. Fuel ethanol production increases by 2% in 2026, with the fuel ethanol share of motor gasoline consumption at 10.7%, compared with 10.5% in 2025. Renewable diesel production increases 24% and biodiesel production increases 41% in 2026, compared with 2025. We forecast production of all three fuels to increase further in 2027, when the RVO increases further.
Principal contributor: Jimmy Troderman
