Educational Briefing Series
Article No. 6
How Do RINs Become Separated?
Author: Clayton McMartin
When renewable fuel is produced a RIN is assigned to each gallon. According to the regulations, these assigned RINs can only be transferred along with renewable fuel. The RINs can not move independent of renewable fuel until such time that the associated fuel is blended into finished petroleum products or purchased by an obligated party, such as a refiner. An assigned RIN can be identified by the first number in the RIN which will be the numeral 1. An example of an assigned RIN is:
12008480270076000011020003994400048031 (K code = 1)
In principal, as the renewable fuel is placed into the retail market along with petroleum products, the RIN is then separated from the fuel. In practice the rules read that obligated parties, such as refiners and importers of gasoline, and those who blend renewable fuel with finished gasoline, such as splash blenders and oxygenate blenders, are required to separate the RIN from the fuel. A separated RIN is easily identified by the first numeral being a 2. An example of a separated RIN is:
22008480270076000011020003994400048031 (K code =2)
At this time in the RIN’s life it becomes a renewable fuel credit, no longer associated with the physical product. In essence the RIN is now a paper credit that can be traded between and amongst any parties that are registered with EPA to participate in the RFS program. Ultimately the separated RIN will be used by an obligated party such as a refiner or importer of gasoline in the United States. These obligated parties demonstrate compliance through the submission of RINs to EPA at the end of each compliance year.
Posted in Educational Briefing Series
Educational Briefing Series
Article No. 5
How Are RINs Tracked?
Author: Clayton McMartin
The regulations require that activity pertaining to RINs be tracked and reported to EPA each quarter. In principle this is a simple concept; in practice it is much more complex.
As title to product and the associated RINs are transferred from one party to the next the supplier (transferor) is required to generate and deliver documentation to their customer (transferee). As the transferee then sells to their own customer, and so on down the line, the same type of documentation is required each time title is transferred. Now that each of these events have been documented, each party is required to keep the records in an organized manner and report to EPA every quarter on their activity. These standardized reports are due 2 months after the quarter closes. EPA staff members can then process the data to track the movement of renewable fuel through the supply chain and determine if all parties are in compliance.
EPA engages an audit approach to the program where they gather data pertaining to literally millions of transactions and then process and look for discrepancies among the data. This approach could best be categorized as post audit activity, revealing violations months after they have occurred.
Alternatively companies participate on the Renewable Fuel Registry, taking a proactive approach to RIN tracking and validation. Through automated processes, product transfer documents (PTD’s) and RIN Certificates™ are transmitted from supplier to customer in an immediate and electronic manner. Data is transmitted directly to the customer’s electronic account, where they can manage future transfers if they care to. Since the registry is a real-time data base, RINs are validated and tracking instantaneously. The proactive approach has the benefit of minimizes future audits and costly violations for those participating on the Registry.
Posted in Educational Briefing Series