Something about this sounds familiar.
In the wake of news that Aventine Renewable Energy Holdings filed for bankruptcy, I have to wonder if the little 38-digit renewable identification number, or “RIN” is what’s killing ethanol demand.
Here’s how RINs work: To meet the Renewable Fuels Standard (RFS), every refiner, blender and importer of gasoline must demonstrate that ethanol comprises a certain percentage of their gasoline volume. To make sure enough ethanol is getting blended into the fuel supply, a unique code – or RIN – is assigned by the ethanol producer to every gallon of fuel transferred to refiners. Refiners then prove they have met their obligation to blend in ethanol by turning RINs into the EPA annually.Instead of blending all the ethanol themselves, however, refiners also have the option to buy excess RINs (or credits) from other refiners who have done extra blending. It's important to note, also, that RIN credits expire and they can only be applied to 20% of an individual obligated party's mandated level, according to USDA.
Because of low gasoline prices, more refiners have opted to blend less ethanol and simply buy more credits. It is this excess use of RINs that may be killing off ethanol demand. At least Aventine, in its statement regarding its filing for bankruptcy, seems to think so. [More of Jeanne's excellent coverage of this story]
Which leads us to ponder how much we really want cap-and-trade-type programs and the inevitbale certificate machinations that will ensue.
1 comment:
there are checks and balance to most things except integrity, its what you have when you donot have to, when nobodys looking, and when whats right is right.
FARMERS whom work with the land depend on prayer as the exta boost needed to have the upper hand.
big oil on the other hand, raises prices reduces supply creats shortage to stimulate demand and gouge prices./
so why would they follow the good of the farmer when they bow to profit.
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