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The Renewable Fuel Standard

Introduction to Renewable Fuels Background Image

When George W. Bush signed the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007, ethanol was hardly a household name, even though it had been used as a fuel since the early 1800s. The Renewable Fuel Standard (“RFS”) established by the Acts required that domestically produced renewable fuels, like ethanol, be blended into U.S. transportation fuel. While the RFS was originally intended to increase U.S. energy security by substituting ethanol for imported petroleum, in recent years it has come to be viewed as a tool to help reduce carbon emissions through the substitution of fossil fuel based fuels with fuels produced from renewable sources.

Under the RFS, transportation fuels sold or introduced into commerce must contain a certain percentage of certain categories of renewable fuels. RFS compliance obligations fall on fuel refiners and importers. Compliance is certified by tracking renewable identification numbers, known as RINs. Producing a gallon of renewable fuel generates a RIN, which can then either be retired by its producer to comply with that year’s requirements or sold to another party on the open market. RINs are categorized by their generation year and renewable fuel category (“D-Code”). Each year, the amount required to be produced in each category ratchets up. Refiners and importers that do not produce renewable fuels must purchase RINs to meet their individual renewable volume obligations determined pursuant to the RFS. Since 2013, actual final obligations published by the EPA have lagged the statutory requirements.

The EPA published the final obligations for 2020, 2021, and 2022 on June 3, 2022. While higher than any prior obligations, they were slightly lower than the proposed targets published in December 2021.

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This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.