Posts Tagged ‘Clayton McMartin’
Educational Series: How are RINs Tracked?
RFS Educational Series Briefing No. 5: How Are RINs Tracked?
Written by Clayton McMartin for Televent DTN
The RFS regulations require that accurate records pertaining to RIN activity be maintained and summary reports be submitted to EPA each quarter (1). In principle this is a simple concept; in practice it is much more complex.
As title to product and the associated RINs are transferred from one party to the next the supplier (transferor) is required to generate and deliver documentation to their customer (transferee). As the transferee then sells to their customer, and so on down the line, the same type of documentation is required each time title is transferred. Now that each of these events has been documented, each party is required to keep the records in an organized manner and report to EPA every quarter on their activity. These standardized reports are due two months after the quarter closes (1). EPA staff members can then process the data to track the movement of renewable fuel through the supply chain and determine if all parties are in compliance.
EPA utilizes a post-audit approach to the program, where they gather data pertaining to literally millions of transactions and then process, looking for discrepancies and inconsistencies among the data. The shortcoming of this approach is the fact that possible violations are revealed months after they have occurred, making for considerable challenges in the area of enforcement and overall exposure.
An alternative approach is for companies to voluntarily participate on the renewable fuel registry where they take a proactive approach to RIN tracking and validation. By utilizing a third party verifier, companies are able to manage massive amounts of data on one standardized computing system (2). Through a centralized registry, companies are also able to conduct a more through job of due diligence and minimize ownership issues before they occur. The RIN program is “Buyer Beware” and any liability resulting from title defects fall to the current owner.
(1)Future View: As discussed in Briefing #2, the reporting frequency will increase under RFS2, first to monthly then to within three days of the transaction.
(2)Future View: EPA has proposed a centralized and closed system for clearing RIN transactions known as the EPA Moderated Transaction System (EMTS). EPA has stated that they hope to bring increased confidence to the marketplace with EMTS – schedule to go into effect in 2011. More details will be provided about EMTS in future briefings.
Click here to download a PDF of Educational Series Briefing No 5: How are RINs Tracked?
Past briefings are available by clicking here.
Tags: Clayton McMartin, Educational Briefing Series, EMTS, EPA, EPA Moderated Tracking System. RINs, RFS
Editorial: EPA Appears Caught in a Catch 22
Two key timing issues have essentially paralyzed the Environmental Protection Agency at this point regarding the Renewable Fuels Standard. The first is the pending issuance of the much awaited final rules for RFS2 and the second is the Nov. 30th deadline for the 2010 mandates. It appears that EPA cannot issue one without the other.
Why is this? Because it is essentially a “Catch 22” leaving EPA in the unenviable position of establishing a mandate with what some will challenge they have no authority to do.
In fact, during the comment period for RFS2 notice of proposed rulemaking, the American Petroleum Institute in comments from Al Manato delivered to the docket on Sept. 25 made the following comments on this subject:
a. EPA cannot enforce EISA RFS volume mandates without final regulation.
“It is API’s position that EPA cannot lawfully establish renewable fuel standards (either general or fuel-type specific) based on the volumes set forth in the Energy Independence and Security Act of 2007 (EISA) without completing the rulemaking specified in the final sentence of CAA 211(o)(2)(A)(i). In addition, EPA cannot lawfully extend the RFS program to fuels other than gasoline. API is concerned that the Agency has imposed the EISA-mandated total renewable volume in 2009. EPA should not attempt to enforce a 17 percent greater mandate in 2010 until the RFS2 rulemaking is finalized. The rules that were finalized according to the Administrative Procedures Act procedures which implemented the Energy Policy Act of 2005 (EPACT05) require no more than 6.8 billion gallons of renewables in 2010.”
Nov. 30th came and went without EPA issuing the much awaited 2010 mandates for renewable fuels. The 2005 Energy Policy Act requires EPA to work with the Department of Energy and establish the coming year’s renewable fuel standard, which then allows obligated parties to establish their volumetric targets for the coming year. According to statutes, this report is due no later than Nov. 30th of the year prior to the compliance year in which the mandates are being established.
Of course, the mandates also serve as a floor to renewable fuel demand and allow producers, distributors, marketers, blenders, and importers to establish their strategic plans for the coming year. Even in the best of cases, there is little time to make final operational and commercial modifications. And now with less than a month remaining in 2009, companies are left wondering what the final targets will be.
Obviously, not everyone sees this important issue the same way. However, the bottom line is the fact that this constant uncertainty combined with delays will take its further toll on all who operate in the renewable fuels business arena.
Tags: Clayton McMartin, EPA, renewable fuel mandates, RFS2, RFS2 notice of proposed rulemaking
Educational Series: How Are RINs Used?
RFS Educational Series Briefing No. 4: How Are RINs Used?
Written by Clayton McMartin for Televent DTN
In previous briefings we covered the fact that RINs are utilized to track renewable fuel through the supply chain, but ultimately RINs are used to demonstrate compliance. Companies identified by EPA as “obligated parties” must meet the mandated standards in order to remain compliant with the federal law.
The typical obligated party is a company that refines crude oil and produces finished gasoline. By far the biggest portion of obligated parties are refiners, such as ExxonMobil, ConocoPhillips, Valero, BP, Shell, and Chevron. Other companies that fall under the RFS obligated party classification would be importers of gasoline into the U.S. as well as companies that buy petroleum intermediate components and blend at facilities like fuel terminals to produce finished gasoline.
Under the regulations, each of these obligated parties is then bound by the law to use their pro-rata share of renewable fuel. Recalling that the RFS is really a percentage established each year (see Briefing #1 What is the Renewable Fuel Standard?), the company multiplies their on-road gasoline production (1) times the RFS to determine their obligation. This is called their RVO or renewable volume obligation.
Obligated parties demonstrate to EPA that they have met or exceeded their RVO by the submission of RINs each year. These RINs can be acquired through the process of purchasing and blending renewable fuel into their own pool of petroleum products or by acquiring RINs from another party that has blended renewable fuel in excess of their RVO and is willing to sell their RINs to the obligated party. As you can see, central to the RFS program are provisions for credit banking and trading, with the RIN serving as the paper credit for this purpose.
(1) FUTURE VIEW: Under the RFS2 the program basis is extended from only on-road gasoline to now include non-road, locomotive, and marine fuels. Additionally, the RVO will be broadened to encompass four separate standards. With RFS2 come four categories of mandated fuels, resulting in four different standards each year. More details about these four different standards and how the program will work will be provided in future RFS Educational Briefings.
Click here to download a PDF of Educational Series Briefing No 4: How Are RINs Used?
Past briefings are available by clicking here.
Tags: Clayton McMartin, Educational Briefing Series, Renewable Volume Obligation, RFS2, RINS, RVO
Educational Series: Where Do RINs Come From?
RFS Educational Series Briefing No. 3: Where Do RINs Come From?
Written by Clayton McMartin for Televent DTN
RINs are generated as a result of the production or importation of renewable fuel into the United States. The RINs serve as identification numbers for each gallon of renewable fuel placed into commerce, allowing EPA to monitor the movement and use of renewable fuel in the marketplace.
The assignment of RINs, contrary to what some believe, is not conducted by EPA (1). Instead RINs are assigned by the producer or importer in accordance with the rules found in the Renewable Fuel Standard program. Section 80.1126 provides all of the details necessary for a producer or importer to assign RINs to their product.
With the exception of producers who produce less than 10,000 gallons per year, and importers who import less than 10,000 gallons per year of renewable fuel, it is mandatory that RINs be generated as the renewable fuel is placed into commerce.
The process of generating the RIN is really one of the easiest steps in the program. A producer simply needs to gather the required data pertaining to their entity, facility, and product type. Then as fuel is produced or imported a unique batch number for the applicable year and the total volume of RINs are added to the 38-digit series resulting in what EPA defines as the parent batch RIN. Producers can generate RINs on the renewable fuel registry by providing only two pieces of data, the volume of fuel and denaturant content in the case of ethanol.
(1) FUTURE VIEW: The impending implementation of the RFS2 program will bring fundamental changes to the way RINs are assigned to produced and imported product. EPA has proposed modifications to the rule due to numerous errors that have occurred through the present RIN generation approach. EPA will eventually issue RIN numbers as producers and importers submit operational data directly to EPA in a more real-time manner.
More details about RFS2 and the resulting changes will be covered in future briefings.
Click here to download a PDF of Educational Series Briefing No 3: Where Do RINS Come From?
Past briefings are available by clicking here.
Tags: Clayton McMartin, Educational Briefing Series, RFS2, RINS
Educational Series: What is a RIN?
RFS Educational Series Briefing No. 2: What is a RIN?
Written by Clayton McMartin for Televent DTN
The three-letter RIN is an abbreviation for Renewable Identification Number. Under the Federal government’s Renewable Fuel Standard (RFS) a RIN is assigned to every gallon of biofuel produced or imported into the United States. Comprised of 38 digits, the RIN serves effectively as a serial number which is tracked throughout its life in the renewable fuel supply chain, from the point of production to the point at which the fuel is placed into the retail market.
Valuable information about the fuel and its producer is embedded within the 38-digit code that makes up the RIN. Here is a sample of what you can readily determine from the RIN number:
– Status of the RIN as far as being tradable as a separated credit (more on this later)
– The year the fuel was produced - also referred to as the vintage
– Who produced or imported the renewable fuel
– Where it was produced or imported into the U.S.
– What kind of fuel, ethanol, biodiesel, etc. (more on this later)
– Its equivalence value (more on this later)
– Whether it comes from cellulosic technologies or not
– And the total volume of credits assigned to a batch of renewable fuel
As an example of a RIN consider the following:
12009480270076000011020003994400048031
RINs are useful for tracking renewable fuel at every link of the supply chain. The process starts when renewable fuel is produced or imported and the 38-digit serial number is assigned to the fuel. Tracking and reporting to EPA is then continued as the fuel is transferred from supplier to customer and so on and so on. Once the renewable fuel is placed into the retail market the RIN is separated from the fuel and then serves as a tradable credit. This separated RIN, or credit, can then be traded from one party to another, similar to other environmental credit trading programs.
Ultimately the RIN is used to demonstrate to EPA that a party has met their particular obligation under the RFS. EPA monitors the overall program by having every party in the supply chain report their RIN activity to the agency on a quarterly basis. The advanced fuel standard (RFS2) requires that the frequency of reporting increases first to monthly and then to near real-time, or within three days of transfer.
Future briefings will provide more details about how the RIN number is used, who has value in RINs, and how the changing regulations will impact business throughout the motor fuel sector.
Click here to download a PDF of Educational Series Briefing No 2: What is a RIN?.
Past briefings are available by clicking here.
Tags: Clayton McMartin, Educational Briefing Series, RINS
Contact Us
Would you like more information about Clean Fuels Clearinghouse? You may contact us at 575-377-3369 or email us at sales@cfch.com.
Tags: CFCH, Clayton McMartin, Clean Fuels Clearinghouse, Melissa Donovan, RINSTAR
Coming Up Short
Coming Up Short
By: Kris Bevill
From the November 2009 Ethanol Producer Magazine
Tags: Clayton McMartin, Clean Fuels Clearinghouse, Energy Independence and Security Act of 2007, Environmental Protection Agency, EPA, Renewable Fuel Standard, Renewable Identification Number, RFS2, RIN, RINSTAR, RINStar Renewable Fuels Registry
Educational Series: What is The Renewable Fuel Standard?
RFS Educational Series Briefing No. 1: What is The Renewable Fuel Standard?
Written by Clayton McMartin for Televent DTN
The Renewable Fuel Standard or RFS is a federal program which promotes the use of renewable fuels in the nation’s motor fuel pool. The initial RFS, now known as RFS1 was established as a result of the 2005 Energy Policy Act (EPACT) and went into effect on Sept. 1, 2007. Fundamental to the RFS is the mandated use of renewable fuels, such as ethanol and biodiesel, throughout the continental United States and Hawaii (1).
The first year of the new fuel standard required that a minimum of 4.7 billion gallons of renewable fuel, prorated to the months September through December, be blended into the nation’s on-road gasoline and diesel fuels. The actual standard is expressed as a percentage, based upon the American motorist’s fuel use in any given year. In 2007 the RFS value was 4.02 percent of the nation’s total on-road gasoline consumption, excluding Alaska. Working together with the Department of Energy, EPA is required to calculate and publish the coming year’s standard by Nov. 30th of each preceding year.
An advanced fuel standard, known now as RFS2, was enacted into law with the passage of the 2007 Energy Independence and Security Act (EISA), and signed by President George W. Bush on Dec. 19, 2007. The new RFS2 dramatically increases the mandated use of renewable fuels. This is accomplished through an increasing schedule of approximately 30 percent annually at which point it peaks at 36 billion gallons per year in 2022.
Originally scheduled to take effect on Jan. 1, 2009, RFS2 has been plagued with delays. Through the formal rulemaking process, EPA proposed a new effective date of Jan. 1, 2010, which will almost certainly be delayed even further.
In our next article we will investigate the renewable identification number also known as the RIN.
(1)Non-contiguous states and territories had the choice to opt into the renewable fuel standard as it was originally promulgated. Hawaii petitioned EPA on June 22, 2007 to opt into the RFS program, and EPA approved their request on July 22, 2007.
Click here to download a PDF of Educational Series Briefing No 1: What is The Renewable Fuel Standard?.
Tags: Clayton McMartin, Educational Briefing Series, Renewable Fuel Standard, RFS2, RINS
Televant DTN & CFCH Launch Educational Briefings Series on RFS2
How will New Fuel Standards Impact Your Profitability?
History has shown time and time again that the most successful businesses in any sector recognize and adapt to change sooner than their competition. Without a doubt, the Renewable Fuel Standard represents one of the biggest changes faced by both the petroleum and the agriculture industries in their histories. This fuel standard went into effect on Sept. 1, 2007 and has changed the way business is now done. And with the impending advanced standard, known as RFS2, the most successful operators in the supply chain will need to prepare now for even more changes in the coming months and years.
Recognizing the importance of these issues, and the needs of our readers, Telvent DTN is launching a series of educational briefings on the RFS. Clayton McMartin, founder of the RINSTAR® renewable fuel registry, is our guest editor for this informative series. Hundreds of companies conduct business through RINSTAR’s registry each day, representing billions of gallons of renewable fuel products every year.
McMartin is recognized as the industry expert on the RFS and the renewable fuel credit known as the RIN. During this series, he will share his valuable knowledge and unique insight into the biofuel supply chain and the world of RIN trading.
The series will highlight too how and why the motor fuel and agriculture industries are tied more closely together through regulations and how this fact will change the business environment forever.
Today starts the twice weekly series of briefings. The educational briefings will start with the basics and then build upon that foundation, providing a clearer picture of the changing business arena and better positioning you and your organization to compete.
Tags: Clayton McMartin, DTN, Educational Briefing Series, RFS2, RINS
About Clean Fuels Clearinghouse
Clean Fuels Clearinghouse (CFCH) is best known as the home of RINSTAR®, the nation’s only private sector registry for renewable fuels and the associated credits known as Renewable Identification Numbers, or RINs. Interacting with over 500 companies throughout the renewable fuel supply chain daily, RINSTAR is recognized as the leader in the marketplace for RIN management and validation services. As a private sector, third party verifier, RINSTAR has conducted due diligence and facilitated the trading of over 12 Billion Gallon-RINs. The registry provides its membership with the highest level of confidence possible in the market for renewable fuel credits.
Respected throughout the industry as the thought leaders in the field of advanced renewables and low carbon fuels, CFCH interacts as a stakeholder with the Environmental Protection Agency (EPA) and such state agencies as the California Air Resource Board (CARB). A combination of unique experiences and practical industry insight position CFCH to guide its clients through the challenges associated with regulatory change.
Clayton McMartin and Melissa Donovan founded CFCH in 2001 with the mission of “Delivering Business Solutions for Cleaner Fuels”. McMartin holds degrees in Petroleum and Chemical Engineering and Donovan a degree in Computer Science. For more information about CFCH contact us at 575-377-3369.
Tags: CFCH, Clayton McMartin, Clean Fuels Clearinghouse, Melissa Donovan, RINS, RINSTAR