Web exclusive posted March 17, 2009, at 3:01 p.m. CST

Contrary to a previous Biodiesel Magazine report (see below) that stated underground mines can receive and sell renewable identification numbers (RINs), EPA rules currently require the RINs be retired for fuel destined for off-road use.

The following clarification of the U.S. EPA rules was found in the question and answer section of the EPA Web site.

The EPA believes that most biodiesel will ultimately be used as motor vehicle fuel, and therefore biodiesel producers can assume the biodiesel meets the EPA definition of renewable fuel and can assign RINs to it without tracking its ultimate use. However, if a renewable fuel is known to be destined for use in a non-road application, such as agricultural equipment or underground mining equipment, it's not considered a motor vehicle fuel and isn't a renewable fuel that is valid for renewable fuel standard(RFS) compliance, and thus can't receive RINs. In cases where the fuel has been assigned RINs, those RINs must be retired and reported.

For biodiesel and other renewable fuels destined for motor vehicle use, there is a provision for the separation of the RINs from the fuel, which then can be sold separately. However, that separation of RINs can't be done with fuel destined for off-road use. Recently, RINs have been trading at around 15 cents per gallon, which has the industry exploring new market opportunities.

The industry is encouraged to examine the proposed new rules for the RFS that is expected to be published in the next several weeks. The Energy Independence and Security Act of 2007 made a number of changes in the renewable standard beyond setting new blending targets. It's expected those will included changes to the handling of RINs.


EDITOR'S NOTE: The above clarification of the EPA's rules regarding off-road biodiesel use and RINs corrects information that Biodiesel Magazine reported from a March 5 webinar. The original web exclusive, which has been rewritten to reflect updated information, appears below.

Webinar: Underground mines can benefit from biodiesel

By Susanne Retka Schill

Biodiesel producers have a new market unfolding in the underground mining business, where many mine managers are turning to biodiesel to meet tighter air quality requirements that went into effect last year.

Renewable Energy Group Inc. hosted more than 100 participants in a March 5 webinar that covered the basics of using biodiesel in the mining industry. Webinar participants also included media and biodiesel industry representatives interested in the emerging market.

"When you buy a gallon of biodiesel, we assign those RINs to you," Scharingson said to mining industry representatives during the webinar. "Those in the mining industry are not obligated parties, and you have the opportunity to sell those to the petroleum majors who are obligated parties." Currently, RINs are selling for 16 cents per gallon. With biodiesel carrying a 1.5 RIN credit, a biodiesel RIN is worth 23 to 24 cents per gallon, Scharingson said.

The webinar covered a number of the benefits of using biodiesel in mines, as well as the measures to take when switching from standard diesel to high biodiesel blends or B100. Many in the underground mining industry are turning to biodiesel as a means of reducing diesel particulate matter (DPM) levels as required by the Mining Safety and Health Administration. "We've had mining customers who are willing to pay a significant premium for biodiesel," Jon Scharingson, REG director of marketing, said. "If that mining operation is unable to meet DPM targets, MSHA has the ability to shut down that mine."

Scharingson and Dave Slade, technical manager for REG, covered the importance of biodiesel quality, the proper handling of biodiesel, situations where oxidative stability additives are appropriate, and other issues for new users of biodiesel. Slade stressed that a statement from original engine manufacturers (OEMs) initially caused some confusion. "The OEMs do not restrict you from using biodiesel," he said. "Many have endorsed B5 and many B20. Saying 'does not endorse B100' does not mean 'warranty will be voided.'" Slade pointed to an Oregon decision from the mid-1990s where the courts ruled that fuel use cannot void engine warranties. He added that on-spec biodiesel cannot harm any part of a modern engine, and may actually help due to less soot and higher lubricity. The major issues are with older natural-rubber based hoses, seals and gaskets.

RINs and off-road use
A question arose during the webinar which was later clarified by REG regarding the handling of renewable identification numbers (RINs). RINs are the tracking mechanism created by the U.S. EPA to monitor what obligated parties are doing to meet the renewable fuels standards. Currently, the renewable fuels standard enacted in the Energy Policy Act of 2005 (RFS1) doesn't allow RINs to be transferred when it's known to be destined for non-road applications. "In visiting with various groups, we believe this to mean that selling biodiesel directly to a mine (sending them a railcar, for example) creates this 'non-road application' and those RINs must be retired," said an REG spokesman. However, a fuel distributor with mine customers can collect and handle the RINs. "As you know, the regulations for RFS2 (the renewable fuels standard enacted in the Energy Independence and Security Act of 2007) are not yet written/released. It looks promising that the RFS2 will allow mining operations to take advantage of RINs. The industry looks forward to understanding the final regulations once released."

Biodiesel Magazine examined biodiesel use in the underground mining industry in its May 2008 issue. Read "Gaining Traction."