MILWAUKEE (PRWEB) May 05, 2020
RINs are the tradeable credits used to demonstrate compliance with the U.S. Renewable Fuel Standard (RFS). Market prices for RINs dropped substantially in recent months when the biodiesel tax credit was reinstated for 2018 and 2019 and extended through 2022. This matches the prediction of the model in our paper. Specifically, the price of biodiesel RINs is mainly driven by underlying economic fundamentals.
In the new article published in the American Journal of Agricultural Economics, “The Price of Biodiesel RINs and Economic Fundamentals” Scott Irwin, Kristen McCormack, and James Stock create a model in the paper that can explain around 80% of the variation in D4 biodiesel RIN prices.
Irwin says, “To explain RIN price volatility, one does not need to resort to market irrationality or market manipulation; rather, one need look no further than the supply and demand for biodiesel, the setting of statutory volumes in the Renewable Fuels Standard (RFS), and the history of the U.S. Congress intermittently extending, or not, the biodiesel tax credit.”
If you are interested in setting up an interview with Irwin, please contact Allison Scheetz in the AAEA Business Office.
ABOUT AAEA: Established in 1910, the Agricultural & Applied Economics Association (AAEA) is the leading professional association for agricultural and applied economists, with 2,500 members in more than 60 countries. Members of the AAEA work in academic or government institutions as well as in industry and not-for-profit organizations, and engage in a variety of research, teaching, and outreach activities in the areas of agriculture, the environment, food, health, and international development. The AAEA publishes two journals, the American Journal of Agricultural Economics and Applied Economic Perspectives & Policy, as well as the online magazine Choices and the online open access publication series Applied Economics Teaching Resources. To learn more, visit http://www.aaea.org.