1. Yesterday had some fun commenting on the SECOND FINAL RVO for 2020 from the Biden EPA. Today I'm going to look at the broader question of the volume and value of the RIN relief provided to refiners in the latest rulemaking for 2020 and 2021.
2. Here is my recap of 2020. EPA rolled back the total renewable RVO by 1.4BG more than would have happened with the automatic downward adjustment due to COVID pandemic under the FIRST FINAL RVO for 2020. That is a good estimate of the gallons given to refiners for that year. 
3. Now what about 2021? The Biden EPA did not have to adopt the cockamamie logic of COVID, the little reset, and lateness to crush the 2021 RVOs. It is important to be clear that the Biden EPA did not have to do this. It was a simply a choice.
4. My argument is that the FIRST FINAL RVO represents a good benchmark for what could have been a reasonable expectation for the 2021 RVOs. I call it the status quo benchmark. If we use that as the benchmark, the 2021 RVOs represent a total cut of 1.57BG. Starting to add up.
5. Now lets put the 2020 and 2021 cuts together. 1.4 + 1.57 = 2.97BG in cuts for the two years. Lets just round it to 3BG to keep things simple going forward. That is my estimate of the size of the compliance gift given to refiners for 2020 and 2021 in the new rulemaking.
6. An even better way to put it. The Biden EPA just gave refiners a "get out of jail free card" of 3 billion gallons for 2020 and 2021 RFS compliance. The Biden EPA did not have to do this. It was a choice. Next question is the $ value of this get out of jail free card.
7. $ value of the 3BG of RINs that refiners do not have to fork over for 2020/21 compliance is a bit tricky to estimate because you have to assume what RINs would have been turned in and at what price. Will give it the old college try.
8. My assumption is that if the 3BG of RINs had to be turned over, this would cause D4 to basically equal D6 price and both would go up. How far? Anybody's guess. I will start the bidding at $2/gallon. 3BG X $2 = $6 billion. Cool chunk of change.
9. My point is not that my specific numbers are absolutely correct. Rather, that the Biden EPA just gave refiners a get of jail free card for 2020 and 2021 that was worth several billion dollars. Something around $5 billion is not hard to imagine.
10. Finally, want to note that I did not come up with the "get out of jail free card" myself. Unnamed co-conspirator. You know who you are. Brilliant turn of a phrase. Thanks!
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