New Biofuel-Trading Venue Sees Untapped Demand in Green Revival

November 24, 2020

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by Kim Chipman (Bloomberg/Yahoo! Finance) The U.S. market for biofuel credits has long drawn calls for reform over lack of transparency. Trading-technology expert Julian Anstes says he has the answer. Anstes and the firm he runs, London-based OTC Direct Markets Ltd., have developed an online trading platform set to go live Dec. 2 with at least 35 companies and 70 more in the pipeline, according to Anstes. OPIS by IHS Markit and brokerage Blackstar Markets LLC are partners.

The venue, OTC Direct, aims to make trading of renewable identification numbers -- the credits oil refiners use to prove they have met annual U.S. biofuel-blending quotas -- more liquid and transparent and less costly to trade. It also can trade credits tied to clean-energy programs in California and Oregon, and accommodate any future regional or national environmental markets as part of the shift to a carbon-neutral economy.

OTC Direct is debuting as the RIN market surges. Conventional ethanol RINs climbed 9.1% to 72 cents on Nov. 10, up from a 2020 low of 13 cents in January, after the declared victory of U.S. President-elect Joe Biden, who will take office having made unprecedented commitments to address global warming. While prices have since backed off, they’re still up almost eight-fold since the end of last year.

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Trades often are negotiated among companies, traders and brokers via email and instant messages.

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While President Donald Trump has drawn praise for championing corn-based ethanol, his EPA has been sharply criticized for its handling of the Renewable Fuel Standard, including its decisions to exempt more oil refineries from biofuel-mixing requirements.

“The RIN and biofuels markets suffered from economic and political uncertainty for the past four to five years,” (independent renewables trader Neil) Shah said. There’s now some “some fragile optimism.” READ MORE