RFS2 compliance: little known facts can have a big impact
August 1, 2012
BY Ashley Player
The last thing that a biodiesel producer wants to hear is that they have done something wrong under the renewable fuel standard (RFS2). Although many areas of RFS2 are clear, the regulations are ever-evolving and subject to interpretation. One potential gray area is the treatment of off-spec biodiesel—many facilities simply sell the material without RINs to be reprocessed by other biodiesel plants. A question that might be asked is: does an approved pathway exist for the production of biodiesel from off-spec methyl ester, if the methyl ester originated from approved feedstock?
To answer this question, we have to go back to the fundamentals of RFS2. Everyone now knows that in order to generate a valid RIN, the fuel must have been produced according to a pathway in Table 1 to §80.1426. The line item in Table 1 that most biodiesel plants use to generate RINs is shown below:
|
Fuel Type |
Feedstock |
Production Process Requirements |
D-Code |
|
Biodiesel, and renewable diesel |
Soy bean oil; |
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Oil from annual covercrops;
Algal oil;
Biogenic waste oils/fats/greases;
Non-food grade corn oil
One of the following:
Transesterification
Hydrotreating
Excluding processes that co-process renewable biomass and petroleum
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Obviously, “off-spec methyl ester” is not included as a feedstock in the table, but some people feel comfortable defining it as a “biogenic waste oil/fat/grease.” In our experience at Frazier, Barnes & Associates, the EPA will not likely accept a feedstock as such unless it is 50 percent or higher triglyceride material; therefore off-spec methyl ester would not appear to meet this requirement according to the regulations.
What if the plant could trace each gallon of biodiesel back to the original feedstock used to make it to ensure that it is on the list in the table above? Could valid RINs then be generated? According to EPA representatives and due diligence performed by FBA, the answer would be “no.” The reason being that a facility registers with the EPA as a “producer” and must certify each batch of fuel produced for all of the steps shown above. The EPA definition for facility is shown below.
40 CFR, Part 80, Subpart M, §80.1401: “Facility means all of the activities and equipment associated with the production of renewable fuel starting from the point of delivery of feedstock material to the point of final storage of the end product, which are located on one property, and are under the control of the same person (or persons under common control).”
Therefore, each biodiesel facility has to be in control of the process from feedstock to finished fuel product. To the surprise of some, reprocessing off-spec methyl ester from another facility is not an approved pathway. It is in the plant’s best interest to only generate RINs that are valid, since producing invalid RINs either knowingly or unknowingly, even in small amounts, could have serious and long-lasting ramifications.
The industry needs to focus on rebuilding its reputation and restoring faith in the biodiesel market. Long-term growth and sustainability can be achieved if we work together towards a goal of 100 percent RFS2 compliance.
Frazier, Barnes & Associates, a leading biodiesel consulting firm, has been involved in the biodiesel industry for more than a decade and in RFS2 since February 2010. If you have questions about RIN generation and other technical or market related issues, please contact us.
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