The latest twist in what has been a months-long windy and rocky road with EPA Administrator Scott Pruitt and the Renewable Fuel Standard, is the agency issuing “vintage RINs.” No, they aren’t something you can buy at Goodwill.
AgriTalk host Chip Flory explained the situation like this on Thursday: “This is infuriating to me that EPA Administrator Pruitt is issuing 2018 RINs to some of these refiners out there in an effort to make up for waivers that were not issued under the previous administration.”
According to Flory these “vintage RINs” are reducing the incentive for refiners to blend ethanol.
“So what's happening is as they put these vintage RINs out on the market obviously it increases the total supply of trends in the marketplace drives the value of those rents down,” Flory said adding that a lower valued RIN removes incentive to blend ethanol.
Brian Jennings CEO of the American Coalition For Ethanol gave this explanation. The RIN value is “the currency” for the price not to comply with the RFS. A higher RIN price is supposed to be a more attractive incentive for obligated parties and other blenders to purchase ethanol, blend it with their gasoline and make it available in the marketplace.
“The more blending of ethanol and gasoline that takes place, the lower RIN prices will be,” he said. “But what EPA is doing to get to that lower RIN price, by the way about 20 cents today down from 70 some cents on January 1, is artificially, as you said, creating this glut of RINs, which is driving RIN prices down not by blending ethanol, but by creating more paper on the market.”
He says this is another example of Administrator Pruitt circumventing the law.
“If you recall, Scott Pruitt testifying before the Senate before it's confirmation vote to become the EPA Administrator, remember, this man was the Attorney General of the state of Oklahoma and very proud of the fact that he was the top law enforcement officer in that state. You're supposed to enforce the law,” he said. “He was patting himself on the back for really wanting to adhere to the rule of law and issuing RINs for waivers the couple of refiners didn't receive back in 2013 and 2014 really doesn't seem legal to me.”
According to Jennings, EPA has consistently said RIN prices do not impact the economics of these refineries because they recover those compliance costs by what they charge for diesel fuel and gasoline.
“Yet, at the same time, EPA, as you said, is handing these waivers out like Trick or Treat candy. And so we have to get back to the rule of law,” he said. “The law has to mean something. And it's in place just so we can have access to the market through renewable fuels can have a place in the market.”