While most ethanol companies blame financial troubles on high commodity and energy prices, Aventine Renewable Energy Holdings, Inc. has thrown a new reason into the ring — blaming its bankruptcy on the availability of excessive Renewable Identification Number credits or RIN. RINS are used by the EPA to track how much ethanol is being blended into the the fuel supply. Oil companies were to have reported their ethanol use to the EPA by the end of February.
Typically the ethanol marketer (Aventine) assigns the RIN and can then sell the ethanol with or without the RIN. The value of the RIN sold separately fluctuates from as low as 2 ½ cents to as high as 16 cents per gallon.
In a company statement released earlier this week, Aventine’s President and CEO, Ron Miller, was quoted as saying, “Ethanol demand has also been negatively affected by refiners and blenders using excess renewable identification numbers (“RINS”) to help meet their renewable fuels standard obligations instead of purchasing actual gallons of ethanol.”
RIN trading has become flush with speculators causing concern that these excess credits may instead be the result of fraud and duplication. At present, EPA is planning to address this issue in RFS-2 which is now scheduled to be released and in effect in early 2011 and is looking to create a Moderated Transaction System (MTS) that would serve as the federal registry for RINS.
Today, there is a voluntary RINS registration system called RINSTAR that is run by Clean Fuels Clearinghouse. In a release today, company President Clayton McMartin said, “We are able to safeguard our members against invalid RINS by taking proactive measures thorough our patent pending certification processes.”
As more ethanol is blended into the fuel system to meet environmental and domestic energy goals the controversy and market uncertainty surrounding the buying and selling RINs is expected to intensify.