The federal Renewable Fuel Standard (RFS) requires gasoline and diesel refiners, blenders and importers to purchase and use an ever increasing number of renewable fuel credits (known as RINs) representing volumes of renewable fuel to offset the annual production of petroleum - based transportation fuel. The cost of complying with the RFS has increased by more than 1400% in 2013, costing refiners and importers of gasoline and diesel approximately $0.09 for every gallon of gasoline and diesel they produce at present RIN prices.
RINs are generated by renewable fuel producers when they sell qualifying renewable fuel. RINs may be traded separately or with corresponding volumes of renewable fuel. The renewable fuel produced is blended with gasoline and diesel and used for transportation fuel, heating oil and jet fuel.
There are several different types of RINs, corresponding to different types of renewable fuel that qualify for the mandates of the RFS: (1) total renewable fuel RINs (generally representing corn - ethanol production); (2) biomass - based diesel RINs (generally representing biodiesel production); (3) advanced biofuel RINs (generally representing sugarcane - ethanol production); and (4) cellulosic RINs (representing fuel from the fibrous portion of a plant). This year, importers and refiners of gasoline and diesel will be required to purchase and retire 13.8 billion corn - ethanol RINs, representing approximately 85% of the overall number of RINs that these parties must purchase.
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