Our definition and guide to Renewable Identification Number (RIN) will highlight everything you need to know about using these to generate more revenue from your biofuels projects.
What is a Renewable Identification Number (RIN)
In simple terms, a Renewable Identification Number (RIN)is the identity of each gallon of biofuel. It is a serial number, which helps to track the production of biofuel, it’s trading and use. The generated and assigned RIN is unique and it is not possible to find two batches with a similar RIN.
For example, the RIN for renewable diesel gives all the necessary information about every processed batch. It relates to every gallon obtained from such a batch. In fact, RIN ensures that the manufacturer has met every renewable fuel standard.
All RINs are composed of 38-character, which represent the following information.
- Year of the production
- Identification of the manufacturer
- Where it was created
- The batch number
- Renewable fuel designation and similar other elements involved during the creation of biofuel
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Breaking Down Renewable Identification Number (RIN)
To ensure the compliance of regulations related to the blending biofuels into fossil fuels, the United States Environmental Protection Agency dictates the use of biofuels. The obligated parties must demonstrate that their production capacity is in line with the RFS quota.
Hence, they must submit the required amount of RINs 101 to EPA. This suggests that all the manufactures who possess RINs should register with the EPA on a yearly basis. They are also bound to fulfill the record-keeping requirements.
After creation, it is essential to report every RIN to EPA. These RINs are also required by the Renewable Fuel Standard (RFS). This is the concerned body which also governs the Renewable Energy Certificates (RECs).
Given below is one of the examples of Renewable Identification Number (RIN).
RIN Format: KYYYYCCCCFFFFFBBBBBRRDSSSSSSSSEEEEEEEE
K: Identifies whether the RIN is assigned to a gallon or detached
YYYY: Year of production
CCCC: Company ID
FFFFF: Plant/Facility ID
BBBBB: Batch number
RR: Biofuels equivalence value
D: Renewable fuel category
SSSSSSSS: Start number for the batch of biofuel
EEEEEEEE: End number for the batch of biofuel
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Benefits of Renewable Identification Number (RIN)
One of the most noticeable benefits of the RIN relates to the quality of the biofuels. The information provided through the renewable identification number ensures that all the quality and environment protection regulation have been met.
Following are the benefits of the RINs.
- RIN prices prove to be the economic incentive, which helps to increase the consumption of renewable fuel
- These prices exhibit the marginal cost of production for each renewable fuel
- RIN prices act as a stimulant to expand renewable fuel production
- Increases the investment in the infrastructure of all renewable fuel distribution
- Offers discounts for those biofuels, which usually offer a high renewable content
Apart from the above-mentioned advantages, the RIN also helps to disengage the unbranded retail stations.
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How Renewable Identification Number (RIN) Works
The obligated parties such as fuel refiners, blenders, and importers receive an annual renewable volume obligation (RVO). The RFS program assigns this particular quota to the obligated parties. This allows them to sell the assigned volume of renewable fuels, which is usually based on the percentage of overall fuel sales of each company.
A RIN is an identification number or ticket pasted on every gallon of biofuel. For example, for each gallon of ethanol, there is one renewable identification number.
However, there is one and a half RINs for each gallon of biodiesel.
Once created, these RINs are pasted to each gallon of biofuel (ethanol or diesel). This ticket or identification number stays with the gallon until the blending procedure starts. The basic theme behind the creation of the RIN system is to track whether the obligatory parties are complying with the regulations of RFS.
The manufacturers who are permitted to blend the gasoline and ethanol can sell RINs to one another. For instance, if the refiner ‘A’ continues to purchase and blend the renewable fuel even after meeting the RFS requirements for the year, such a refiner can obtain additional RINs.
As a result, the refiner ‘A’ holds the authority to sell additional RINs to the importer ‘B’. Even if the importer ‘B’ has failed to purchase the required amount of renewable fuels, it is possible to make such a deal. RIN trading exchange serves as a great place to buy and sell the RINs at a realistic price.
Once a biofuel gallon receives a RIN number, it turns into a renewable fuel credit. When this product reaches the consumer, it still contains the unique renewable identification number. For the purpose of transferring the paper RIN credit and biofuel, it is essential to complete and transmit the transfer documents.
Furthermore, when transferring the renewable fuel in the future, each party linked with the sale of such a renewable commodity should provide the RIN and relevant transfer documents. These documents are necessary to keep the record of sale and purchase of the biofuel.
This program and the rules associated with it are applicable to every party looking to claim the product title. Each party that is a part of the supply chain and is associated with the production or blending of the biofuel must follow the strict rules carved by the RFS.
Following are the relevant parties, who are capable of purchasing, selling, and blending the biofuel.
- Ethanol and biofuel producers
- Petroleum refiners
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Conclusion on RINs
The renewable identification number is a way to track and measure the compliance of RFS regulations. It is a serial number of 38 characters. Only the qualified gallon of produced biofuels can receive a RIN.
The RIN continues to stay with the gallon of each fuel until the blender mixes it with the gasoline or diesel. After the blender sells the blended fuel, it’s time to detach the RIN. The separated RIN can be then sold to other parties just like any other commodity.
The next buyer can use these RINs for the upcoming year. This serves as a great opportunity for those importers and blenders, who haven’t met their RFS regulations for the current year. This mechanism serves the purpose to control irregular use of biofuels.
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