RINs: Not about Global Warming

There is a tendency to judge the merits of Renewable Id Numbers (RINs) on whether or not you believe government legislation can make much impact on global warming.  I know some people are pretty steamed to have to buy them, but its actually about energy independence and avoiding pumping money into countries the US doesn’t want to.

A RIN is a number associated with every gallon of renewable fuel produced by a qualifying facility. Refiners and importers are required to submit a certain volume of RINs each year to offset our dependency on foreign oil.  If they cannot meet the mandated amount directly by generating or buying biodiesel and blending it into their petroleum products, they can buy RINs from biodiesel producers who are not subject to the mandate.

This economy of RINs came from the Energy Policy Act of 2005 which was designed to address energy problems on the whole, and the provisions regarding greenhouse gasses were removed from the original draft before it was signed into law.  I remember hearing about how that would make it like the Kyoto Treaty.  The result was a Renewable Fuel Standard (RFS) which manages RINs (and RIN fraud).

In 2007, the RFS was expanded by the Energy Independence and Security Act  requiring refiners and importers to blend over a billion gallons of biomass-based diesel a year, but it was not enforced until 2011 at which point only 800 million gallons was being produced, driving up the cost of the RIN credits.   There is not enough biodiesel made to meet the requirement due to cheap petroleum diesel.

Here is an article form Feb 2011 that is well written.

Biodiesel production is at 1.3 billion gallons per year as of 2013 and growing.

The Denver Biodiesel Cooperative has felt the impact of the volatility if the RIN subsidy as fiscal year 2013 comes to a close.  The recent increase in biodiesel cost is related to the fact that the bottom has dropped out of the RIN market which offset their their cost by about $0.80 throughout the bulk of the year.  With the Late October recent RIN price of $0.24 they only get $0.36.  Food for thought:

http://www.platts.com/latest-news/agriculture/houston/current-year-biodiesel-rins-hit-three-year-low-21745422

http://www.eia.gov/todayinenergy/detail.cfm?id=11671

If there is a silver-lining here it may be that cheaper animal fat and waste cooking oil feedstocks will be bolstered indirectly leading to a more sustainable supply.

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