The Renewable Fuel Standard (RFS), enacted through the 2005 and 2007 U.S. Energy Acts and administered by EPA, was designed to raise biofuel volumes in the transportation fuel supply through rising annual mandates through 2022. Its stated rationales are energy security, development of lower-greenhouse-gas fuels, and support for U.S. agriculture. Under the mandate, roughly 30% to 40% of the annual U.S. corn harvest is now used to produce fuel ethanol.
Compliance is tracked through Renewable Identification Numbers (RINs), which are coded by fuel category. D6 RINs, associated with corn-derived fuel ethanol, are by far the largest pool. When Renewable Volume Obligations exceed the “blendwall”—the roughly 10% ceiling at which ethanol can be blended into gasoline given filling-station and vehicle constraints—RIN prices, notably D6s, rise considerably. Because supporting agriculture is a stated RFS objective, a key question is whether high D6 RIN prices, driven by mandates set above the blendwall, actually affect corn prices.
This Chart of the Week regresses daily corn price changes on D6 RIN price changes over 2013–22, both across all administrations and split by the Obama, Trump, and Biden years. The D6 coefficient is statistically significant in every period—positive for the pooled sample (0.017) and for the Obama (0.037) and Trump (0.019) subperiods, but negative for the Biden years (-0.079). The economic magnitude, however, is minimal: R² values range from just 0.002 to 0.013, and correlations run from 0.047 across all administrations to -0.114 under Biden.
Companion regressions show ethanol price changes are more strongly tied to corn price changes (correlations of roughly 0.29 to 0.42, R² up to 0.176) than to D6 RIN price changes (correlations of 0.03 to 0.10). Taken together, the results suggest that D6 RIN prices explain almost none of the movement in corn prices, casting doubt on the premise that RIN prices materially drive corn prices or induce adjustments in corn production.
From the EPRINC Chart of the Week archive.