The D4 RIN is the tradable compliance certificate for the biomass-based diesel mandate in the Renewable Fuel Standard (RFS). Understanding the price dynamics of the D4 RIN is important for understanding the RFS because its price sets a ceiling on the ethanol RIN (D6) and because some observers have suggested that RIN price fluctuations are too large to be explained by economic theory. We use option pricing theory to develop a model of the D4 RIN in terms of its economic fundamentals: the spread between the prices of biodiesel and petroleum diesel and the status of the biodiesel blenders’ tax credit. The resulting D4 fundamental price closely tracks actual D4 prices. We conclude that RIN price volatility arises because of the design of the RFS and intrinsic features of the US fuel supply system.

中文翻译：

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生物柴油 RIN 的价格和经济基础

D4 RIN 是可再生燃料标准 (RFS) 中基于生物质的柴油指令的可交易合规证书。了解 D4 RIN 的价格动态对于理解 RFS 很重要，因为它的价格为乙醇 RIN (D6) 设定了上限，并且因为一些观察家认为 RIN 价格波动太大而无法用经济理论来解释。我们使用期权定价理论根据其经济基本面开发 D4 RIN 模型：生物柴油和石油柴油的价格之间的价差以及生物柴油混合商的税收抵免状况。由此产生的 D4 基本价格密切跟踪实际 D4 价格。我们得出的结论是 RIN 价格波动的出现是由于 RFS 的设计和美国燃料供应系统的内在特征。