By Lynn L. Bergeson
On March 18, 2019, (EPA) announced a public hearing to be held for the proposed rule: “Modifications to Fuel Registrations to Provide Flexibility for E15: Modifications to RFS RIN Market Regulations.” 84 Fed. Reg. 9734. The proposed rule would implement regulatory changes allowing E15 to take advantage of a Renewal Fuels Standard (RFS) program waiver. Currently, the 1-psi Raid Vapor Pressure (RVP) waiver only applies to ten percent ethanol (E10) during the summer months. The proposed rule also includes an interpretative definition of E15 gasoline as “substantially similar” to the fuel used to certify Tier 3 motor vehicles. Lastly, EPA is also proposing changes to some RFS compliance system elements that would improve renewable identification number market functioning and prevent market manipulation. The public hearing will take place in Ypsilanti, MI, on March 29, 2019. The proposed rule was published in the Federal Register on March 21, 2019. 84 Fed. Reg. 10584. Comments are due by April 29, 2019.
By Lynn L. Bergeson
The U.S. Environmental Protection Agency (EPA) has included a new data portal on its website to promote greater transparency on small refineries exemptions to the Renewable Fuel Standard (RFS). Criticized in the past for its lack of transparency, EPA’s new RFS data portal also provides previously undisclosed information on Renewable Identification Number (RIN) transactions, renewable fuel volume production, average RIN prices, and RIN transaction volumes. The data available dates back to July 1, 2010, which is when EPA started collecting the information provided. EPA intends to update the data portal on a monthly basis.
By Lynn L. Bergeson
On May 8, 2018, President Trump met with a group of Republican Senators and told them that he is considering allowing exported ethanol to count toward the volumes mandated by the Renewable Fuel Standard (RFS). During this meeting, Mr. Trump also reiterated support for expanding sales of E15, and withdrew his verbal proposal to cap the price of RINs, which had been widely criticized by the ethanol industry. These announcements came after increasing concern about the future stability of the RFS after the U.S. Environmental Protection Agency (EPA) recently granted over two dozen hardship waivers to small refineries for 2017, a drastic increase from EPA’s prior practice of granting between six to eight hardship waivers annually.
The ethanol industry reacted favorably to some of these proposals, with the Biotechnology Innovation Organization (BIO), a member of the Biobased and Renewable Products Advocacy Group (BRAG®), releasing a statement thanking President Trump for rejecting the RIN cap and for his support of year round sales of E15. Brent Erickson, Executive Vice President of BIO’s Industrial & Environmental Section, stated: “Ensuring that E15 can be sold year round in states and regions where it is already approved will give advanced and cellulosic ethanol more opportunity to compete in the market in coming years. E15 reduces the price of gasoline by 5 to 15 cents per gallon, and it lowers tailpipe and greenhouse gas emissions all year round. . . . BIO and its members continue to oppose unnecessary changes to the Renewable Fuel Standard. EPA has already provided unwarranted waivers to oil refiners that are destroying demand for all biofuels and undercutting industry investments. We thank Senators Grassley and Ernst for standing with us in opposition to the damaging proposal for a cap on RIN prices.” Mr. Trump’s proposal to allow RINs from exported ethanol to count towards mandated volumes under the RFS was greeted with more caution, with Erickson stating: “We remain concerned about the impact counting RINs from exported renewable fuels would have on the development of advanced biofuels and we look forward to working with the Senators to ensure the RFS continues to promote production and use of homegrown biofuels.” Kevin Skunes, President of the National Corn Growers Association, was also distrustful of this proposal, stating: “Offering RIN credits, which are supposed to be derived from a domestic renewable fuel use, for ethanol exports would threaten trade markets and impact corn farmers’ economic livelihoods.”
By Lauren M. Graham, Ph.D.
On May 10, 2017, the U.S. Environmental Protection Agency (EPA) released Renewable Identification Numbers (RIN) generation data for April 2017, reporting that nearly 1.5 billion RINs were generated during the month.
Nearly 17.3 million D3 cellulosic biofuel RINs were generated in April, bringing the total for 2017 to 49.9 million, including 1.3 million D3 RINs generated for ethanol, 17.9 million generated for renewable liquefied natural gas, and 30.7 million generated for renewable compressed natural gas. Of the 49.9 million RINs, 44.7 million were generated by domestic producers, and 5.2 million were generated by importers.
More than 279.6 million D4 biomass-based diesel RINs were generated in April, resulting in a total of 973.3 million for 2017. The majority of RINs, 736.5 million, were generated for biodiesel, with 235.9 million for non-ester renewable diesel, and 937,219 for renewable jet fuel. Nearly 694.9 million RINs were generated by domestic producers, with 168.5 million generated by importers and nearly 109.9 million generated by foreign entities.
For D5 advanced biofuel, 7.0 million RINs were generated in April, which brought the total for 2017 to nearly 22.7 million. Naphtha accounted for the majority of RINs generated, 10.9 million, with 8.1 million generated for ethanol, 890,603 generated for heating oil, and 2.7 million generated for non-ester renewable diesel. In 2017, all D5 advanced biofuel RINs were generated by domestic producers.
Nearly 1.2 billion RINs were generated for D6 renewable fuel in April, resulting in a total of nearly 4.9 billion for 2017. The majority of RINs were generated for ethanol, nearly 4.8 billion, with nearly 84.8 million generated for non-ester renewable diesel. Nearly 4.8 billion RINs were generated by domestic producers, with 3.8 million generated by importers and nearly 84.8 million generated by foreign entities.
The data indicates that no D7 cellulosic RINs have been generated in 2017.
By Kathleen M. Roberts
On May 9, 2017, Senator Elizabeth Warren (D-MA), along with seven additional Democratic Senators, sent a letter to the Securities and Exchange Commission (SEC), the U.S. Environmental Protection Agency (EPA), and the Commodities Futures Trading Commission (CFTC) requesting an investigation into the activities of Carl Icahn for potential insider trading, market manipulation, and other securities and commodities law violations in the renewable fuel credit market. The letter states that the actions of and the massive profit earned by Icahn raise questions related to conflict-of-interest rules that apply to government officials, and questions regarding insider trading and market manipulation of renewable fuel credits, known as Renewable Identification Numbers (RIN) -- which SEC, EPA, and CFTC have jurisdiction over. EPA oversees the issuance and trading of RINs. CFTC works with EPA to ensure integrity in the RIN market since it has broad authority to prevent insider trading and other market manipulation in commodities markets and futures markets. SEC has jurisdiction to investigate whether Icahn’s actions as a senior adviser to President Trump affected CVR Energy's stock value or the accuracy of the company's annual and quarterly financial reporting and disclosure.
The Senators maintained that RIN insider trading and market manipulation hurts all parties, including biofuel producers and refineries, and requested an investigation by the three agencies based on the publically available information detailed in the letter. The Senators also requested information on whether EPA Administrator Scott Pruitt and SEC Chairman Jay Clayton would recuse themselves from the investigation.
EPA released RIN generation data for December 2016, reporting that more than 1.8 billion RINs were generated during the month. More than 16.8 million D3 cellulosic biofuel RINs were generated in December, bringing the total for 2016 to 178 million, including 3.8 million D3 RINs for ethanol, 66.8 million for renewable liquefied natural gas, and 107.5 million for renewable compressed natural gas. Of the 178 million RINs, nearly 160 million were generated by domestic producers, and nearly 19.2 million were generated by importers.
More than 524 million D4 biomass-based diesel RINs were generated in December, resulting in a total of nearly 4.0 billion for 2016. The majority of RINs (3.28 billion) were generated for biodiesel, with 715 million for non-ester renewable diesel. More than 2.85 billion RINs were generated by domestic producers, with 830 million generated by importers.
For D5 advanced biofuel, 6.0 million RINs were generated in December, which brought the total for 2016 to 97 million. Ethanol accounted for the majority of RINs generated, nearly 61.3 million, with nearly 26.3 million generated for naptha, 1.54 million generated for heating oil, and 7.93 million generated for non-ester renewable diesel. Of the 97 million RINs, 62.6 million were generated by domestic producers, 34.4 million were generated by importers, and 312 million were generated by foreign entities.
Nearly 1.30 billion RINs were generated for D6 renewable fuel in December, resulting in a total of nearly 15.2 billion for 2016. The majority of RINs (14.7 billion) were generated for ethanol, with 169 million generated for biodiesel, and 281 million generated for non-ester renewable diesel. More than 14.7 billion RINs were generated by domestic producers, with 179 million generated by importers, and 281 generated by foreign entities.
The data indicates that no D7 cellulosic RINs were generated in December. In 2017, a total of 534,429 cellulosic RINs were generated for cellulosic heating oil. All of the D7 RINs were generated by importers.
As previously reported in the Biobased and Renewable Products Advocacy Group’s (BRAG®) Biobased and Renewable Products Update of November 11, 2016, the U.S. Environmental Protection Agency (EPA) has issued a notice in the Federal Register of a public hearing for the proposed “Renewables Enhancement and Growth Support Rule.” The proposed rule updates the regulatory structure to allow biofuel producers to process and convert biomass at different facilities, update fuel regulations to allow for more high-ethanol fuel blends in flex fuel vehicles (FFV), and permit cellulosic biofuels to be produced from new feedstock sources. EPA is seeking comment on the programs covered in the proposal, as well as renewable identification number (RIN) generation for renewable transport fuels and regulatory requirements for facilities that could use carbon capture and storage (CCS) in the future production of renewable fuels. More information about the proposed rule is available in the BRAG blog post “ EPA Announces Public Hearing For Proposed Renewables Enhancement and Growth Support Rule. ” The proposed rule was published in the Federal Register on November 16, 2016. Comments are due by January 17, 2017, at 5:00 p.m. (EST).
On October 27, 2016, EPA approved an Efficient Producer petition submitted by Redfield Energy, LLC (Redfield Energy) granting “a pathway for the generation of renewable fuel (D-code 6) Renewable Identification Numbers (RINs) under the Renewable Fuel Standard (RFS) program for the production of non-grandfathered ethanol” produced by dry milling. The Efficient Producer petition process is designed to accelerate the registration process for starch and grain sorghum ethanol producers that exhibit superior process efficiency. Redfield Energy claimed the process achieved a 23.9 percent greenhouse gas (GHG) reduction, which surpassed the 20 percent reduction threshold. The South Dakota plant will be the 63rd to gain approval since EPA introduced the Efficient Producer pathway petition process in 2014.
On July 2, 2014, EPA issued a final rule outlining the elements of a voluntary third party quality assurance program to ensure the validity of renewable identification numbers (RIN) petroleum refiners use to confirm compliance with the annual fuel standard. Under the final rule, petroleum marketers may choose between two options to verify the validity of RINs generated between February 21, 2013, and December 31, 2014. Importantly, the final rule includes an affirmative defense for anyone except the generator of the RIN for any civil liability for a RIN that has been verified by a third party auditor. The final rule is available online.
API, AFPM, and ExxonMobil urged EPA and the Office of Management and Budget (OMB) to eliminate the ability of biodiesel producers to sever RINs from batches of fuels produced as part of an upcoming final rule establishing a quality assurance program for the fuels credit market.
The rule, as proposed, would establish qualifications for third-party auditors who would determine the validity of the RINs. It would also establish audit procedures for renewable fuel production facilities, including minimum frequency, site visits, review of records, and reporting requirements. The rule is open for comment now, and EPA is requesting feedback on whether renewable fuel producers should be allowed to separate and sell their own RINs. The groups emphasized that allowing biodiesel producers to separate and sell fuel credits creates opportunities for fraud in the RIN market.
Biodiesel producers are authorized to sever RINs from fuel batches and sell them as credits to comply with the annual RFS blending mandates. This generates two revenue streams -- one from fuel sales, and another from RIN credit sales. This anomaly resulted from a settlement between 30 refiners and other companies and EPA in April 2013, where $3.65 million was paid to EPA in penalties for purchase of fraudulent credits. The National Biodiesel Board and the Renewable Energy Group emphasized that "[t]he biodiesel marketplace is not as mature as other biofuel markets" and "often the value of the RIN provides biodiesel producers with [their] only opportunity to create a margin."