Posts Tagged ‘Renewable Identification Number’

Educational Series: A Recap of the RFS & RINS

RFS Educational Series Briefing No. 11: A Recap of the RFS & RINS

Written by Clayton McMartin for Televent DTN

Profitability of today’s fuel supplier is impacted by how well they understand the regulations that they operate within. Recognizing this, we have provided a series of briefings to help you better understand the regulatory arena you are operating in today, and that you face tomorrow.

Over the past several weeks we have covered several topics related to the renewable fuel standard (RFS) and the credit known as the Renewable Identification Number (RIN). In this wrap-up briefing we will recap the key points and hopefully tie many of these concepts and principals together, giving you a better understanding of how to profit from your new found knowledge.

In Briefing #1 we started with an explanation of what the renewable fuel standard (RFS) is and learned that it is a mandate for the use of renewable fuels.

Briefing #2 then explained the principal behind the 38-digit Renewable Identification Number (RIN) and the important information that can be found in those digits.

In Briefing #3 we started at the beginning of the supply chain to learn that RINs come from producers and importers of renewable fuels. We then focused our attention to the end of the supply chain in Briefing #4 to see how obligated parties would use RINs to satisfy their obligations.

Since in reality, renewable fuel often moves through numerous parties before reaching the end of the supply chain, we moved our attention in Briefing #5 to how RINs are tracked. We saw how the RIN is carried from one party to the next through the supply chain and how EPA utilizes this information to assure compliance.

Since RINs can exist in two different states, either assigned to physical fuel or separated from fuel, we covered this important subject in Briefing #6. We covered the criteria necessary to separate RINs from the fuel and therefore make them a tradable paper credit.

In Briefing #7, Briefing #8 and Briefing #9 we focused more on the market for RINs, investigating who would want to own RINs for investment purposes, what vintage year RINs are valid and their limitations. And then we moved on finally to the market factors that influence RIN prices.

In our most recent Briefing #10, we took our first high level look at how the advanced renewable fuel standard (RFS2) came to be and how it will bring even more complexities and opportunities to those in the motor fuel industry.

As you recognized, the involvement of government in your business is becoming more prevalent with each coming year. Regulatory changes like we have seen with the renewable fuel standards present challenges but also opportunities for those who take the initiative to learn about the factors impacting their business. These fuel standards are a part of business today and will be well into the foreseeable future.

Click here to download a PDF of Educational Series Briefing No 11: A Recap of the RFS & RINS.

Past briefings are available by clicking here.

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Coming Up Short

Coming Up Short

By: Kris Bevill
From the November 2009 Ethanol Producer Magazine

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As the U.S. EPA ponders comments submitted in response to its proposed rule for the second stage of the renewable fuel standard, cellulosic biofuel producers wonder how they will produce enough fuel to meet a 2010 mandate, and what will happen to the industry if they don’t.

The U.S. EPA’s proposed rule for the second stage of the renewable fuel standard (RFS2) is filled with complicated issues that address everything from indirect land use impacts to definitions of feedstocks and greenhouse gas emission reduction rates. A final rule is not expected from the EPA until at least Dec. 1 and could possibly be delayed until next year due to the complexity of the issues being addressed. Nevertheless, in its proposal, the agency calls for 2010 mandate requiring 100 million gallons of cellulosic biofuel to be produced and, so far, there is no indication the agency plans to lessen the volume requirement.

Read the rest of this entry »

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RIN Credits, Ethanol Blending and the 800-pound Gorilla

RIN Credits, Ethanol Blending and the 800-pound Gorilla

By: Ron Kotrba
From the April 2009 Ethanol Producer Magazine


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Renewable energy credit prices are on the rise as ethanol blend economics remain poor and the year-end reporting date looms. EPM talks with Clayton McMartin, president of Clean Fuels Clearinghouse, about renewable identification number credits, industry consolidation, and the oil industry’s 800-pound gorilla, Valero Energy Corp., which can no longer be ignored.

The 800-pound gorilla in the room finally announced itself in early February. For months, speculators have been trying to figure out which ethanol companies will buy out which ethanol plants during this period of crushing economic recession and potential ethanol industry consolidation. Aside from food companies, what other industry made record profits in 2008 and could logically purchase distressed ethanol production facilities? The oil refiners—they who are obligated to blend ethanol into their supplies as mandated under the federal renewable fuels standard (RFS). On Friday, Feb. 6, VeraSun Energy Corp. “took out the trash”—that’s public relations lingo for releasing bad news on a Friday, with the understanding that there will be little coverage of it until at least Monday. The same day, VeraSun issued a press release titled, “VeraSun Energy Obtains ‘Stalking Horse’ Bid From Valero for Five Facilities; Files Motion Seeking Authority to Sell Substantially All Assets by March.” Read the rest of this entry »

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EPA rolls out RINs Moderated Tracking System

EPA Rolls Out RINs Moderated Tracking System

By: Ron Kotrba
From the March 2009 Web Exclusive Ethanol Producer Magazine

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The U.S. EPA held a Webinar on Feb. 25 to explain its development of a Moderated Tracking System that will accurately and securely track renewable identification number (RIN) credits.

A RIN is a 38-character numeric code that’s generated by the producer or importer of renewable fuel; it represents gallons of renewable fuel produced/imported and is assigned to batches of renewable fuel that are transferred (change of ownership) to others. RINs are valid for the calendar-generated, or the following year.

RINs currently apply to the ethanol industry; however beginning in 2010 RINS will also apply to the biodiesel industry.

The EPA is developing MTS to track the generation, distribution and sale of RINs as a way to help accurately enforce the mandates under the renewable fuels standard enacted in the Energy Independence & Security Act of 2007. The market-based renewable fuels registry RINSTAR has been working with the EPA to help develop a federal register through which all RIN transactions would flow to ensure accurate and honest reporting. Read the rest of this entry »

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Spot Ethanol Prices Flat as Supply, Demand in Balance

Spot Ethanol Prices Flat as Supply, Demand in Balance

By: George Orwel
February 2009 DTN Refined Fuels

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NEW YORK (DTN) — Spot ethanol prices rose slightly on Friday from the levels seen Thursday, but there wasn’t much change for the week as traders weighed lower corn prices against higher gasoline values.

In fact, in the ethanol swaps market, prices came off about 3cts, driven largely by the weaker corn market. But physical cargoes of ethanol for late January to early February delivery to Chicago traded at $1.57 and $1.59 gal, reflecting a session gain of 2cts and up 1.5cts for the week.

In the New York Harbor, physical cargoes traded 3cts higher for the session and 1.5cts higher for the week. Houston prices were discussed between $1.68 and $1.70 a gal, although no trade was reported. In the West Coast, most of the discussions on cargoes going to Las Vegas and a few to Phoenix, Ariz., with just a few to California. Read the rest of this entry »

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RIN Registry, Trades, Prices Continue to Grow

RIN Registry, Trades, Prices Continue to Grow

By: Ron Kotrba
January 2009 Ethanol Producer Magazine Web exclusive post Feb. 2, 2009

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Clayton McMartin, president of Clean Fuels Clearinghouse and the RINSTAR renewable fuel registry, was a guest on Bob Taylor’s live webcast show Jan. 27. Prior to the interview, more than 200 questions were submitted for McMartin to answer.

A year ago, McMartin said RINSTAR’s member companies totaled approximately 25, and since then, the registry has grown to include more than 140 members. In 12 months, RINSTAR has validated more than 500,000 trades, and renewable identification number (RIN) prices have gone from the 2 to 3 cent range to 15 cents on the market. “Most importantly, we’ve helped companies throughout the industry profit from this emerging market,” McMartin said.

Taylor placed the submitted questions in one of four categories: general program, compliance and penalties, the new renewable fuels standard (RFS2) and renewable fuels standard 1.5 (RFS1.5), and the economy and marketplace. Taylor then chose questions to ask McMartin during the one-hour show based on frequency. Read the rest of this entry »

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DJ Trading Of RIN Credits Increases As Ethanol Production Slows

Trading Of RIN Credits Increases

By: Ian Berry
From January 2009 Dow Jones Newswires

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CHICAGO (Dow Jones)–Prices for a newly created renewable fuels credit have spiked recently, as refiners decide the credits make better economic sense than purchasing ethanol itself.

The credits, called renewable identification numbers, or RINs, started out trading at less than a penny after their 2005 creation, but now are at 12 to 13 cents for 2008 credits, having climbed during the past couple of weeks. The credits are administered by the Environmental Protection Agency as a way of tracking renewable fuel production.

The EPA had expected that production of renewable fuel would exceed the federal fuel mandate requirements “by a large margin,” creating a surplus of RINs “for at least the first few years of the program” and preventing a shortage, according to the agency’s Web site. But with ethanol plants closing or cutting back production, some analysts say the production could soon fall behind the mandate, which for 2009 is 11.1 billion gallons. Read the rest of this entry »

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Transition Period

Transition Period

By: Ron Kotrba
From the November 2008 Biodiesel Magazine

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The federal renewable fuels standard calls for 500 million gallons of biomass-based diesel to be used in 2009. Many questions remain as to how this will play out.

2009 will be interesting with respect to implementation of the new renewable fuels standard, which many refer to as RFS2. New terms such as “advanced biofuel” and “biomass-based diesel” were never part of the 2005 RFS and just this year emerged as part of the new national energy-policy vernacular. Biomass-based diesel is a specified title under “advanced biofuel.” In 2009, RFS2 mandates that 11.1 billion gallons of renewable fuels must be blended into energy supplies; 10.5 billion of which is corn-based ethanol, and the other 600 million gallons must be “advanced biofuel,” 500 million gallons of which is to be biomass-based diesel. By 2012, 1 billion gallons of biomass-based diesel is required under the mandate.

Since the signing of the Energy Independence & Security Act of 2007—the Energy Bill that RFS2 was part of—speculation has run rampant as to how events will play out. There are a lot of unknowns left, especially since U.S. EPA delayed provisional rulemaking on implementation of RFS2 until January. Read the rest of this entry »

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EPA Will Take More Time To Respond to RFS Waiver Request

EPA Will Take More Time To Respond to RFS Waiver Request

Author: Clayton McMartin

EPA Administrator Stephen Johnson issued a press release today addressing the long awaited decision to Governor Rick Perry’s RFS waiver request filed 88 days ago.  And the answer is, we need more time.

“Additional time is needed to allow staff to adequately respond to the public comments and develop a decision document that explains the technical, economic and legal rationale of our decision,” the EPA said in a news release on Tuesday July 22, 2008.  

According to testimony given by Principal Deputy Assistant Robert Meyers during the July 10, 2008 Senate Environment and Public Works hearing on implementation of the Renewable Fuel Standard, over 15,000 comments had been received by EPA on the waiver request. 

The administrator’s comments would indicate that EPA has yet to make a final decision on the matter, assuring the public through the press release that, “The process remains fair and open, and no agreements have been made with any party in regard to the substance and timing of the decision on the waiver request.”

According to Administrator Johnson, a final decision on the Texas Governor’s petition is expected in August.  No additional details were available.

Whatever the final decision, the impact to the renewable fuel supply chain will be significant.   Texas Governor Rick Perry will open the RINWorld Summit in Dallas Texas on October 16, where industry leaders and government official will convene to discuss and learn more about the cost effective implementation of the RFS.  

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Already on the Books

 

EPA’s Answer to Governor Perry’s RFS Waiver Request Already on the Books

Author: Clayton McMartin

 
[audio:http://cleanfuelsclearinghouse.com/wp-content/uploads/version-2-waiver-answer-on-the-books.mp3]

As surely everyone in the renewable fuels area has heard, Texas Governor Rick Perry petitioned EPA for a partial waiver of the RFS on April 25, 2008.
http://www.epa.gov/otaq/renewablefuels/rfs-texas-letter.pdf
What virtually no one seems to realize is that the answer to the Governor’s request has already been addressed in the existing regulations.

The answer, in the form of legal jargon and published in the federal register on May 1, 2007, can be found in the provision for “deficit carryovers” of renewable fuel credits known as RINs. The exact language can be found in the federal register, 40 CFR Section 80.1127(b), deficit carryovers. For those so inclined, the final rule is available at http://www.epa.gov/otaq/renewablefuels/rfs-finalrule.pdf

More in layman’s terms, the Act anticipated the situation and EPA actually addressed the matter in the preamble to the regulations (Federal Register page 23934) with the following:

“The Act clearly set up a credit program with a credit life, meaning Congress intended parties to use credits in some cases instead of blending renewable fuel. The Act is best read to harmonize all of its provisions. In addition, we note that other provisions of the Act may lead to less renewable fuel use in a given year than the statutorily-prescribed volumes, but Congress adopted them and intended that they could be used. For instance, the deficit carryover provision allows any obligated party to fail to meet its RVO in one year if it meets the deficit and its RVO in the next year. If several obligated parties took advantage of this provision, it could result in the nationwide total volume obligation for a particular calendar year not being met.”

There are essentially no limits to the deficit carryover provision, other than it can not have been invoked during the prior year and if invoked in 2008 can not be used again by the obligated party in 2009. If anyone used the provision in 2007 it would be a very rare, therefore it is essentially available to all obligated parties now.

This foresight, on the part of the original lawmakers, addresses both the Texas Governor’s petition as well as the uncertainty brought about by the flooding in the corn-belt areas of Iowa.

For those who are looking for EPA’s most likely response to any waiver request, consider Clayton McMartin officially on the record now. The answer will be “this issue was anticipated in the original Act and is to be addressed with the use of RINs.” Of course nothing is black and white when it comes to politics, so we will all have to wait to hear EPA’s official response later this month.

Now for some related news. Governor Perry is scheduled to open the inaugural RINWorld Summitwww.RINsummit.com in Dallas Texas on October 16, 2008. Industry leaders will convene to learn more about the emerging markets for renewable fuels, cost effective implementation of the RFS, and the future of renewable fuels in America. 

 

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