Renewable Fuel Standard

For more than a decade, the federal Renewable Fuel Standard (RFS) program has required every fuel refiner and importer to generate an increasing volume of renewable fuel annually.  These “obligated parties” must attain a particular number of renewable fuel credits, known as “RINs” (Renewable Identification Numbers) to show that they are in compliance with the RFS program.  RINs are essentially an artificial commodity that can be bought and sold in an open market.  Many obligated parties are unable to directly generate their mandatory volume of renewable fuel.  In these instances, they rely on others to introduce renewable fuel into commerce for them.  Many NATSO members do this in a manner that enables them to sell fuel at a lower price and realize greater margins on sales.

The RFS program specifies four separate categories of renewable fuels, each with a separate volume mandate that is established annually by the Environmental Protection Agency.  The categories are: (i) total renewable fuel (generally corn ethanol); (ii) advanced biofuel (including Brazilian sugar cane ethanol); (iii) biomass-based diesel (including biodiesel and renewable diesel); and (iv) cellulosic biofuel. 

NATSO members support long markets with a variety of supply options available to them.  The RFS helps provide this.  At the same time, it does inject a variety of complexities into the retail fuels space, including liability concerns associated with storing and dispensing fuel blends with increasing amounts of biofuels.  NATSO is at the forefront of addressing all of these concerns with policymakers in Washington, D.C.

For a more detailed discussion of how NATSO members can understand and participate in the RFS, read the Economics of RINs here. 

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