NBB In Sight

The RIN equation: What is it, what do I do with it?
By Scott Hughes | September 04, 2007
Biodiesel producers have a potential new opportunity for sales growth. The requirements of the Renewable Fuel Standard Program (RFS) began Sept. 1, 2007, and the Renewable Identification Number (RIN) is central to the program's administration. At first glance, a RIN may look like a wicked, advanced algebra problem. In reality, it is the basic currency for the RFS program for credits, trading and use by obligated parties and renewable fuel exporters to demonstrate compliance, as well as to track the volumes of renewable fuels.

A RIN is a 38-character numeric code that is generated by the producer or importer of renewable fuel. It represents gallons of renewable fuel produced or imported and is assigned to batches of renewable fuel that are transferred (change of ownership) to others. RINs are valid for the calendar-generated, or the following year.

A RIN code represents several pieces of information including:

› (K) = whether a RIN is assigned to a batch of fuel (1=assigned/2=unassigned)
› (YYYY) = year the batch is produced/imported
› (CCCC) = producing/importing company registration information
› (FFFFF) = production facility registration information
› (BBBBB) = producer assigned batch number
› (RR) = equivalence value for the renewable fuel (biodiesel is 1.5 = "15")
› (D) = renewable type code (1=cellulosic ethanol/2=non-cellulosic ethanol fuel)
› (SSSSSSSS) = RIN block starting number
› (EEEEEEEE) = RIN block ending number

Producer X decides that each batch will represent one day's worth of production. Producer X also decides all 2007 batches will be numbered sequentially starting on Sept. 1. Producer X registers its company and production facility with the U.S. EPA (Company ID, or CCCC number, is 1234; Facility ID, or FFFFF, is 56789).

Producer X makes one 1,000 gallon tank of biodiesel on the morning of Sept. 1:
› Gallon RINs go from SSSSSSSS = 00000001 to EEEEEEEE = 00001500

Producer X makes another 1,000 gallon tank of biodiesel on the afternoon of Sept. 1:
› Gallon RINs go from SSSSSSSS = 00001501 to EEEEEEEE = 00003000

Producer X delivers all 2,000 gallons of biodiesel to Customer A; Producer X can summarize all gallon-RINs on one batch RIN:

1 2007 1234 56789 00001 15 2 00000001 00003000

Biodiesel producers will be required to transfer all RINs attached to a batch of biodiesel along with the fuel. Assigned RINs are transferred when ownership of a batch of fuel occurs. RINs are not transferred if the fuel only changes custody.

The mechanism used to demonstrate the transfer of RINs will be the product transfer document (PTD). PTDs are required when ownership of a renewable fuel is transferred to another party. They may be in any form of documentation, such as an invoice that demonstrates transfer of ownership of the renewable fuel. Bills of lading normally would not be a PTD unless it transfers ownership as well as custody of the fuel.

PTDs must include:
1) Name and address of transferor and transferee,
2) Transferor's and transferee's EPA company registration numbers,
3) Volume of renewable fuel being transferred,
4) Date of transfer, and
5) Transfer of ownership of RINs assigned to the fuel must also be documented.

Ensuring the objectives of the RFS are met involves a detailed regulatory process. The examples given here are merely illustrative of the concepts surrounding RINs.

Biodiesel producers and distributors play an integral role and have many compliance requirements to complete. Industry participants are strongly encouraged to read and fully understand the regulations and requirements of implementing the RFS. The NBB has posted additional information on its Members Only section of its Web site and is working with the EPA to answer questions that may arise. The EPA has additionally posted information on the RFS regulations, fact sheets and other information related to compliance with the RFS program at www.epa.gov/otaq/renewablefuels/index.htm.

Like advanced algebra, working through the RIN equation might be daunting at first. However, with time, patience and the resources available to you, this equation can be solved. The NBB will work to keep you apprised as we all make this important adjustment together.

Scott Hughes
Director of Regulatory Affairs
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