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Sit on the RINs

Submitted by on November 16, 2015 – 12:12 pmNo Comment

by Jim Lane (Biofuels Digest)  … The US Environmental Protection Agency has discovered the following way of interpreting Energy Independence and Security Act.  To wit, if the transportation fuels supply chain — controlled by guess whom — does not build renewable fuel infrastructure, which they won’t, they don’t have to distribute any more renewable fuels than now, which rob them of market share.

So let me get this straight.

You’re telling me that, if oil companies simply ripped out all the (their) unleaded gas pumps in the country, we all have to go back to using leaded gas in (your) cars? If a corporation doesn’t put in (their) infrastructure to protect (your) data privacy, no data privacy law will be enforced?

With that kind of Obama Administration stewardship of the Renewable Fuel Standard, you might be completely astonished to learn, there’s been almost no increase in the past five years in the number of high-blend renewable fuel pumps.

Staggers the imagination. How could such a thing have come to pass? Despite the fact that, in California, sales of E85 tripled in the past year, on a per-pump basis.

Turns out, the only thing the renewable fuels industry has that the incumbent needs are the RINs. So, why not use some market power?

First, why not take Absolute Energy’s idea, and expand on it? They blend renewable fuels with 15 percent gasoline, claim the RINs, and sell a discounted E85 fuel into the marketplace. But take it a step farther. Why not splash blend fuels, and sit on the RINs? After all, the RIN is a powerful lever, someone needs it. As Tim Berners-Lee once said, “It’s mine – you can’t have it. If you want to use it for something, then you have to negotiate with me. I have to agree, I have to understand what I’m getting in return.”

Why not use RIN power for expanding distribution, instead of providing a free RIN to the incumbent? For example, execute RIN purchase agreements with obligated parties on the basis that they distribute a given percentage of the fuels as E85 or E15? It creates no supply constraint for renewable fuels, and no inconvenience to the consumer. It simply alters the balance of market distribution power.

Second, why not create a volume discount for the E85 customer? …

Five years of focusing on enforcement of the RFS could hardly have gone worse for the renewable fuel industry. The industry faces a halt in renewable volume obligation growth, an abandonment of the US by prospective cellulosic ethanol fuel project developers, a slow-down in EPA pathway approval, snail-like pacing of blender pump growth, and some 180 members of the US House of Representatives calling for a shut-down, phase-out, or lock-down of the Renewable Fuel Standard.

New tactics are called for when old tactics fail. And the power of markets remain.  READ MORE

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