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November 08, 2012
EPA's solution for phony RINs

For the first time since the national Renewable Fuel Standard (RFS) was introduced in 2005, the EPA is initiating regulatory measures to combat the problem of invalid renewable identification numbers (RINs).  Specifically, the Agency is starting up rulemaking to authorize development and implementation of RIN quality assurance plans (QAPs) by independent third parties.  In advance of a proposal planned for release before the end of the year, the EPA issued an early draft of the types of elements that would be required in a QAP.  

The RFS program

Under several federal statutes, the RFS ensures that transportation fuel sold in the United States contains a minimum volume of renewable fuel.  The Energy Independence and Security Act of 2007 (EISA) established a renewable fuel goal of 36 billion gallons by 2022.  EISA also established new categories of renewable fuel and set separate volume requirements for each.  Under EISA, the EPA must apply life-cycle greenhouse gas (GHG) performance threshold standards to ensure that each category of renewable fuel emits fewer GHGs than the petroleum fuel it replaces. 

Authentic RINs

RINs represent volumes that meet the requirements for renewable fuel and are used by petroleum refiners and importers (obligated parties) to demonstrate compliance with their RFS volume obligations.  Once RINs have been generated, they can be transferred between obligated parties.

The RIN market has been hampered by invalid RINs.  According to the EPA, obligated parties are forced to spend considerable time evaluating whether RINs on the market were validly generated.  Industry has been exerting pressure on the Agency to establish a single program to confirm RIN validity.  Such a program will effectively insert greater liquidity into the transfer and use of RINs and help to make the RFS program more efficient and effective.

“Current thinking”        

The early draft of the proposal represents EPA’s “current thinking” on what a QAP should contain.  The Agency notes that some elements could change in the upcoming proposal as information is gathered and other aspects of the proposed program requirements are developed.  Once the EPA releases the proposed QAP requirements, stakeholders may suggest changes and enhancements to the QAP requirements.  “Any final rule will reflect EPA's consideration of comments received on the proposed rule and/or further consideration by EPA,” says the Agency.

QAP elements

EPA’s current draft contains about 3 dozen “potential” elements of a QAP, grouped into four categories:

  • Feedstock-related components–e.g., feedstocks are renewable biomass, crop, and crop residue feedstocks and meet land use restrictions, and contracts or agreements for feedstock acquisition are sufficient for facility production.  
  • Production process-related components–e.g., mass and energy balances are appropriate for type and size of facility, workforce size is appropriate for type and size of facility, and sufficient workers are on-site for facility operations.
  • Renewable fuel-related components–e.g., RIN generation matches wet gallons produced; renewable fuel was intended and sold for qualifying uses as transportation fuel; heating oil, or jet fuel, and volume production is consistent with that reported to the EPA and EISA, as well as other federal or state reporting. 
  • RIN generation and separation-related components–e.g., verification that appropriate RIN-generation calculations are being followed and verification that RINs were retired for any fuel that the producer produced and exported.

Click here to read the draft of EPA’s QAP requirements.

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