Regulation of Fuels and Fuel Additives: Renewable Fuel Standard ...

acquisition of unique Renewable Identification Numbers (RINs) assigned by the producer
to every batch of renewable fuel produced. The RIN shows that a certain volume of
renewable fuel was produced. Each year, the refiners, blenders and importers obligated
to meet the renewable volume requirement (referred to as “obligated parties”) must
acquire sufficient RINs to demonstrate compliance with their volume obligation. RINs
can be traded in the same manner as the credits envisioned in the Act. A system of
recordkeeping and electronic reporting for all parties that have RINs ensures the integrity
of the RIN pool. This RIN-based system would both meet the requirements of the Act
and provide several other important advantages:
• Renewable fuel production volumes can be easily verified
• RIN trading can occur in real time as soon as the renewable fuel is
produced rather than waiting to the end of the year when an obligated
party would determine if it had exceeded the standard
• Renewable fuel can continue to be produced, distributed, and blended in
those markets where it is most economical to do so
• Instances of double-counting of renewable fuel claimed for compliance
purposes can be identified based on electronically reported data
Our proposed RIN-based trading program will be an essential component of the RFS
program, ensuring that every obligated party can comply with the standard while
providing the flexibility for each obligated party to use renewable fuel in the most
economical ways possible.
1. What Is The RFS Program Standard?
EPA is required to convert the aggregate national volumes of renewable fuel
specified in the Act into corresponding renewable fuel standards expressed as a percent
of gasoline production. The renewable volume obligation that would apply to an
obligated party would then be determined based on this percentage and the total gasoline
production or import volume in a calendar year, January 1 through December 31. EPA
will publish the percentage standard in the Federal Register each November for the
following year based on the most recent EIA gasoline demand projections. However,
since this rulemaking will not be finalized prior to November, 2006, we are proposing in
this notice that the standard for 2007 be 3.71 percent. Section III.A describes the
calculation of the standard.
2. Who Must Meet The Standard?
Under our proposal, any party that produces gasoline for consumption in the U.S.,
including refiners, importers, and blenders (other than oxygenate blenders), would be
subject to a renewable volume obligation that is based on the renewable fuel standard.
These obligated parties would determine the level of their obligation by multiplying the
percentage standard by their annual gasoline production volume. The result would be the
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