Biofuels Journal - January/February 2009 - (Page 33)

RINs As Commodity Biofuels Plants Could Market Fuel, RINs Separately Renewable Identification Numbers (RINs)—which are assigned by biofuels producers when their ethanol or biodiesel is sold—can also be sold as a commodity in addition to the fuel. Most producers sell the fuel and the RINs without charging extra for them, according to Clayton McMartin, president of Clean Fuels Clearinghouse, Taos, NM (575-377-3369). Clean Fuels Clearinghouse started the RINSTAR® Renewable Fuel Registry last fall, providing a centralized database for the RINs. RINs ultimately are separated from the renewable fuel after it reaches its final point downstream at the retail level. Those RINs sold as high as 15 cents apiece as of late January. McMartin pointed out “that this value is higher than the margin most ethanol plants are currently experiencing.” Ethanol generates one RIN for every gallon of ethanol produced, while biodiesel is 1.5 RINs for every gallon produced. Buying RINs Instead of Ethanol RFS regulation, legally are allowed by the Environmental Protection Agency (EPA), the agency that administers the RFS program, to purchase the RINs to satisfy their annual renewable fuel obligation. Critical Flaw million gallons of fuel, at a premium, with the equivalent of 2 million RINs. He said currently, ethanol marketers are selling the RINs generated from producers. RINSTAR® Registry Refineries and gasoline importers are required by the Renewable Fuels Standard (RFS) to blend a certain amount of renewable fuels in gasoline. The RFS requires, for example, that up to 11.1 billion gallons of biofuels be blended with gasoline in 2009, with most coming from ethanol. “Right now ethanol margins are bad, but gasoline margins are even worse,” McMartin said. “There is little to no incentive for the refiner or splash blender to put this into his product.” With the RFS mandate in place, however, at the end of the year the refiner or gasoline importer still has to turn in the required amount of RIN credits. Refineries and importers known collectively as “obligated parties” under the McMartin sees it as a “critical flaw” that renewable fuel producers do not view their RINs as a separate commodity when they sell the liquid fuel. “They have to generate the 38-digit RINs and cannot have more RINs than the volume of fuel they produce. But the regulations allow for the producer or anybody in the supply chain to determine the quantity of RINs to transfer based on commercial considerations. “It is a critical flaw that ethanol plants do not differentiate the value of RINs from that of their physical product,” he added. Example. He said one way it could work in practice is to have two customers who each wish to purchase 1 million gallons of ethanol. Customer A agrees to purchase the 1 million gallons of fuel without the RINs. Customer B agrees to purchase the 1 A benefit to producers who wish to register and sell RINs and liquid renewable fuel through the RINSTAR® registry is that the complicated 38-number RIN is tracked automatically and verified to be sure the RIN and fuel are properly registered. “The analogy is like recording a deed at the local courthouse for your property,” McMartin said. “The registry makes sure the transaction is valid. Because there are so many companies (142 members as of Jan. 9) participating, we are able to conduct a thorough job of due diligence in advance of title transfer for the RIN. RINSTAR® eliminates all the paperwork at the plant for the RINs including the reporting requirements to the EPA, and validates the RIN against all the other billions of RINs on the registry. Myke Feinman, editor JAN/FEB 09 | BFJ 33

Table of Contents Feed for the Digital Edition of Biofuels Journal - January/February 2009

Biofuels Journal - January/February 2009 Contents Safety Training Expanding Safety Pays Top 2008 OSHA Citations Ethanol Terminal Safety Preventing Falls Fighting Ethanol Fires Biodiesel Safety Bridgeport Ethanol John Kruse, Global Insight Barley Ethanol New DDGS Market—Fish Mary Beth Stanek, General Motors RINs As Commodity POET BioRefining Ethanol Pipeline—Florida DDGS Causing E. coli Community College Biofuels Ethanol Plants in the Pipeline State Report: Ohio Ethanol World Profile: Adam Dunlap, BlueFire Ethanol When to Harvest Switchgrass, Miscanthus Indirect Land Use Change Profile: Greg Olson, POET-Corning Growth Energy Monthly Ethanol Production Case Study: Fuelzyme Ethanol Industry News Greg Poe, Ethanol Pilot Sponsored by Fagen Inc. Blackhawk Biodiesel Biodiesel Roundup Biodiesel World Peanut Biodiesel Pennycress Biodiesel Radish Biodiesel Profile: Joe Korpi, Renewable Energy Group Biodiesel Convention NBB Eye on Biodiesel Awards Calendar of Events Cellulosic Ethanol Plants Under Construction Cellulosic Ethanol Plants Construction Map Breaking Cellulosic Ground Show Me’s Collecting Biomass Inland Empire Oilseeds POET’s Project Liberty Update Vermeer’s Cob Harvester Iowa State Cob Harvest Research Europe’s Energy Parks Imported Deere Cob Harvest Kit/Case IH Coskata Sugar/Mascoma Update Range Fuels Update Tom Warne, Schutte-Buffalo Hammermill University of Illinois Biofuels Master’s Roger Ladig, Laidig Systems, Inc. Miscanthus vs. Switchgrass Biofuels Automation Scott Martin, LeMar Industries Biodiesel Financing EISENMANN Corp. GATX / Beta Tec ProSonics / S.K. Patil DOE Grant Action Unloaders Ad Index

Biofuels Journal - January/February 2009

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.