LOS ANGELES (Reuters) - Biodiesel maker Renewable Energy Group Inc (REGI.O) on Tuesday reported a 60 percent rise in quarterly profit due in part to sharply higher prices on U.S. renewable fuel credits.
Renewable fuel credits are used by refiners to prove they have blended their share of renewable fuel - mainly ethanol - under the Renewable Fuels Standard (RFS), a program meant to reduce U.S. dependence on foreign oil and cut greenhouse gas emissions.
Renewable Identification Numbers, or RINs, for the biomass-based diesel made by REG rose to $1.07 at the end of the second quarter from 77 cents at the beginning of the quarter, the company said in a statement.
“RIN prices are a reflection of higher demand, and higher demand is helping our business,” REG Chief Executive Daniel Oh said in an interview.
Prices have soared as refiners fear the Environmental Protection Agency will keep unchanged a 16.55 billion gallon blending target for 2013 -- a level refiners say is a burden.
Oh said he expects volumes in the biomass-based diesel component of RFS 2 to increase next year. That component is part of an advanced biofuels mandate included under the RFS and is separate from the ethanol mandate.
Renewable Energy Group’s net income for the quarter ended June 30 was $19.6 million, or 62 cents per share, compared with $11.3 million, or 39 cents per share, a year ago.
Revenue rose 42 percent to $387.1 million.
The Ames, Iowa company uses animal fats, used cooking oil and soybean oil to produce a product that can be blended with diesel fuel. The company controlled about 17 percent of the U.S. biodiesel market last year and plans to expand production capacity by acquiring plants, upgrading existing facilities or building new ones.
REG’s shares have soared over 130 percent this year.
Editing by Andrew Hay