The US Environmental Protection agency should move quickly to resolve problems with Renewable Identification Numbers (RIN) used as biodiesel credits by yearend, an American Petroleum Institute official urged.
“It will become a problem on Jan. 1, when the compliance year starts,” said Bob Greco, API downstream group director. “The longer it takes, the more of a problem it will be. That’s why we’d like a program in place by Jan. 1, 2013, and all the parties to know the rules. The biodiesel producers are pushing for this as hard as we are.”
API understands that there will not see a solution until yearend at the earliest, he told reporters during a Sept. 27 teleconference. “EPA also is working on some kind of interim solution, but would not provide any details,” Greco said.
His remarks came a week after four US House Energy and Commerce Committee members—two Republicans, two Democrats—introduced HR 6444, the Stop RIN Fraud Act of 2012, which require EPA to certify RINs are valid and authentic before they can be traded.
A RIN is a 38-digit serial number assigned to gallons of renewable fuel as they are produced. Refiners and obligated parties must collect and submit enough RINs to EPA each year to match their compliance obligations under the federal Renewable Fuel Standard. Once biodiesel or any other qualifying fuel is produced, RINs are entered into EPA’s Moderated Transaction System.
Just three biodiesel producers generated more than 140 million bogus RINs—approximately 5-12% of the current market—and EPA is investigating others, Rep. Pete Olson (R-Tex.), the bill’s main sponsor, said on Sept. 20. However, EPA’s current program makes unknowing buyers of fraudulent RINs responsible and requires them to obtain replacements, he noted.
“We are looking for EPA to provide obligated parties with the assurance that if they follow certain steps validating the RIN or biodiesel supplier’s viability, that would provide the obligated party the defense it needs,” Greco said.
The agency has administrative authority to adjust cellulosic mandate levels established under the 2007 Energy Independence and Security Act that are scheduled to increase automatically, even though US gasoline demand is declining and refiners and other obligated parties possibly will find themselves required to use more cellulosic ethanol than they can use or is even being produced, he noted.
“There has been no change yet to the system,” Greco said. “We’ve heard reports that other RIN suppliers are under investigation, but I can’t confirm them. It does insert more uncertainty into the situation. We’re all waiting for the next shoe to drop, and that’s not a viable system going forward.”
Contact Nick Snow at firstname.lastname@example.org.