As corn-based RIN prices have reportedly risen as a result of EPA’s Renewable Fuel Standard (RFS) announcement on April 10, now might be a good time to ask: what exactly is a RIN? It’s a simple question with a complex answer, but one that is essential for understanding many problems facing industries affected by the RFS.
Put simply, RFS RINs are the currency for RFS trading and compliance. RIN is an acronym for the RFS renewable identification number. Every gallon of fuel produced that qualifies under the RFS (such as ethanol and biodiesel) is given its own unique 38-character ID by the fuel’s producer or importer.
These IDs are 38 characters long for a reason: they show the type of RIN, the year the RIN was generated, the EPA registration number of the biofuel producer or importer, the EPA registration number for the specific biofuel production or import facility, the specific batch and its volume, and the “equivalence value.” This “equivalence value” is necessary for conversion to an ethanol-equivalent gallon, which is the unit for a RIN.
Since July 1, 2010, RIN trading and ownership are tracked in the electronic EPA Moderated Transaction System (EMTS). Trading can involve biofuel producers and importers, refiners, importers of gasoline and diesel, and others registered with EPA. Of course, biofuels can be traded with or without the RINs. Also, in some cases, RINs can be traded separately from the renewable fuel.
Refiners of fuels that do not qualify under the RFS, and gasoline/diesel importers, also use EMTS to demonstrate RFS compliance. Non-RFS refiners and gasoline/diesel importers can use RINs generated last year to meet up to 20 percent of their current RFS obligation. RINs can only be used for RFS compliance in the year the RIN is generated, or the following year.
Straightforward so far? Well, here it begins to get a little more complicated. Not every RIN can be used for RFS compliance for every mandate, because some RINs have to be matched with a specific obligation. For example, a corn ethanol (or conventional biofuel) RIN cannot be used for RFS compliance for the cellulosic biofuel, biomass-based diesel or advanced biofuel obligation.
A renewable fuel obligation (RVO) is the number of required RINs for RFS compliance for an individual obligated party. There are four RFS mandates, so there are four RVOs:
- Total renewable fuels
- Advanced biofuels
- Cellulosic biofuels
- Biomass-based diesel
Allied to these, there are major RIN types, identified by their “D” code (which makes up part of each RIN’s 38-character ID code:
- D=1,2 (these are old, and no longer used)
- D=3 (Cellulosic biofuel)
- D=4 (Biomass-based diesel)
- D=5 (Advanced biofuel)
- D=6 (Renewable fuel, mostly corn ethanol)
- D=7 (Cellulosic diesel)
To complicate matters further, RFS compliance is complicated because the four mandates are nested:
- Advanced biofuel = Cellulosic biofuel + Biomass-based diesel + other
- Total renewable fuel = Advanced biofuel + conventional biofuel
The table below both illustrates this nesting, and also demonstrates that RINs must be matched with specific obligations in order to achieve RFS compliance:
RIN Type (D code)
*A D7 RIN cannot be used to demonstrate compliance with both a cellulosic biofuel RVO and a biomass-based diesel RVO – only one of these
Can you now answer the question “What’s a RIN?” If you are like most other people you probably still cannot answer it. This part of the RFS program is complex and hard for everyone to comprehend, much less understand the implications. Even EPA does not have the resources to compile and publish all of the RINs data in a timely and helpful manner.