“The EPA developed RINs to help obligated parties meet RVOs as part of the RFS’s goal to reduce GHGs.”
Say what?! While that statement is accurate, the alphabet soup in the sentence underscores a challenge with renewable fuels in this country: it is difficult for the average person to make sense of the complex terminology, let alone the details of the 2005 national renewable fuels policy developed to improve air quality. With that in mind, here’s our best effort to explain — in simple terms — the U.S. renewable fuels program.
RFS (Renewable Fuel Standard)
This federal program requires companies that refine or import gasoline or diesel to meet certain renewable fuel quotas in order to offset the total quantity of petroleum-based fuel introduced into the marketplace. This program is administered by the U.S. Environmental Protection Agency (EPA) and is intended to reduce greenhouse gas emissions (GHGs). In the context of the RFS, companies that refine or import gasoline or diesel are known as obligated parties.
RVO (Renewable Volume Obligation)
This is the mandatory amount of renewable fuel the EPA requires refiners and importers to blend into petroleum fuels. The EPA sets the Renewable Volume Obligation on an annual basis, and the volume required by each obligated party is based on a percentage of its petroleum product sales. To meet their RVO requirement, obligated parties may either blend their fuel with the amount of biofuel set by the EPA or they may buy blending credits (see RIN below).
RIN (Renewable Identification Number)
A RIN is an alphanumeric code assigned to every gallon of renewable fuel produced in, or imported into, the U.S. The EPA tracks compliance with the RFS through these codes. Refiners and importers turn RINs in to the EPA to demonstrate compliance with their RVOs. Here’s how it works: the RIN remains associated to the gallon of renewable fuel until it is blended into the petroleum fuel.
Blenders and refiners who purchase renewable fuel receive the associated RIN free of charge. After blending, the RIN is no longer associated to a specific batch of fuel and it becomes a tradeable compliance credit. Obligated parties who blend more than their required volume of renewable fuel will have surplus RINs that may be sold to other parties, such as obligated parties that fell short of their RVO.
Learn More about the RFS and RINs: