Valero Sees RIN Bank Depleting by End of Year or Mid-2027, Supporting Higher D4 RIN Prices
Valero Energy expects the Renewable Identification Number (RIN) credit bank to be depleted between the end of the year and sometime in the middle of 2027, a scenario the company said would likely keep biomass-based diesel D4 RIN prices elevated as biomass-based diesel production falls short of compliance obligations.
During Valero’s second-quarter earnings call on Thursday, Eric Honeyman, senior vice president of renewable operations and low-carbon fuels, said the company views the RIN market as short despite relatively strong RIN generation reported in June from the U.S. Environmental Protection Agency (EPA).
“Everyone is looking at the June numbers, thinking, ‘Wow, those are exceptionally higher. We should have no problem meeting [the RVO].’ Maybe,” Honeyman said.
“What we see is you still had a lot of players that did not produce D4 [RINs] in Q1 waiting on the RVO release,” Honeyman added. “So, 2026 in particular is going to be a low production year versus the obligation, which means you will draw the [RIN] bank. We see that as structurally keeping the D4 RIN high.”
Valero Chairman, President and Chief Executive Officer Lane Riggs said the company is closely monitoring if or when the RIN bank could be exhausted, adding that the market has little precedent for how the Renewable Fuel Standard (RFS) would function if sufficient RINs were no longer available to meet
current and future compliance obligations.
“I don’t think anybody knows what happens if it goes infeasible,” Riggs said. “That is a concern.”
Honeyman said the pace at which foreign biomass-based diesel imports enter the U.S. market could play an important role in determining whether supply is sufficient to meet the EPA’s 2026 and 2027 Renewable Volume Obligations (RVOs), but the company believes imports face greater hurdles now than under previous federal incentive programs.
Historically, imports helped fill any shortfalls in domestic renewable diesel and biodiesel when the now-expired $1/gal Blender’s Tax Credit (BTC) was available because imported volumes qualified for the credit.
The BTC expired at the end of 2024 and was replaced in 2025 by the Section 45Z Clean Fuel Production Credit, which discourages imported fuels in favor of incentivizing domestically produced biomass-based diesel.
“What’s different now with this RVO and RIN driver is you have to be registered to generate RINs, and so a lot of these foreign importers are not registered to generate RINs,” Honeyman said. “That will take an administrative step to do that.”
He added that recently announced tariffs further raise the cost of imported renewable fuels, making them less competitive and slowing the pace at which imports could respond to higher RIN prices.
“It just makes that hurdle more difficult,” he said. “So, you have no tax benefit on foreign imports plus this issue. It’s RIN-driven now, not tax-driven. Think of it as a pathway in order for foreign imports to get in. They eventually will because that will be needed to satisfy this RVO. That is, I think, the main reason why we haven’t seen foreign imports pick up as rapidly as everyone expected.”
Valero said its renewable diesel segment, which consists of the Diamond Green Diesel joint venture with Darling Ingredients, reported $717 million of operating income in Q2, compared to an operating loss of $79 million in the same quarter last year. The company reported renewable diesel volume sales averaged 3.8 million gal/day during the quarter.
In its ethanol segment, Valero reported $318 million of operating income during Q2, compared to $54 million in the same quarter last year. The company reported ethanol production volumes averaged 4.7 million gal/day during the quarter.
Reporting by Bryan Sims, bsims@opisnet.com; Editing by Aaron Alford, aalford@opisnet.com