EPA Responds to Rep. Gene Green’s Call to Bring Certainty Back to the Biodiesel Market

Washington – Yesterday, the Environmental Protection Agency (EPA) sent Rep. Gene Green a letter concerning their efforts to bring certainty back to the market for biomass-based diesel fuels (biodiesel).

“This issue was first brought to my attention last November and since then I have been encouraging the EPA to take measures to provide stability in the biodiesel market,” said Rep. Gene Green. “I am pleased to see the EPA finally committing to a regulatory timeline to fix the problem and working to ensure that when the 2013 compliance year starts, producers and buyers can be assured that if any fraudulent RINs remain, there is a liability system in place that encourages refiners, traders and blenders to purchase RINs from both small and large biodiesel producers.”

Section 211(o) of the Clean Air Act, as established by the Energy Policy Act of 2005 and amended by the Energy Independence and Security Act of 2007, requires EPA to establish and manage a Renewable Fuel Standard (RFS) program to ensure that transportation fuels contain a minimum volume of renewable fuels. The Clean Air Act, as amended in 2005 and 2007, also requires EPA to create a program that allows parties subject to the renewable fuels program to generate, buy, and sell credits representing a certain amount of renewable fuels. EPA established a credit tracking and trading system based on the renewable identification number (RIN), a unique 38-digit code that is assigned to each gallon of biofuel produced or imported into the United States.

Over the course of the past year, the production of and trade in fraudulent or invalid RINs has emerged as a significant problem within the market for biomass-based diesel fuels. In the wake of the announcements of this fraud, and related enforcement actions by EPA to require obligated parties to replace the invalid RINs, the market for biodiesel RINs has tightened dramatically.  Most affected appear to be small producers and other biodiesel marketers who are having difficulty selling RINs to obligated parties, which have backed away from transacting with all but the largest and most-well known biodiesel producers.

A copy of the letter can be found here.

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