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White Paper: What Others are Saying about the Point of Obligation

Congress established the Renewable Fuel Standard (RFS) program in 2005 and revised the program in 2007, requiring that ethanol and other biofuels be blended into our domestic transportation fuel supply. Congress instructed the Environmental Protection Agency (EPA) to set RFS standards annually that are “applicable to refineries, blenders, distributors, and importers, as appropriate, to ensure that the requirements [of the RFS] are met.”

EPA promulgated rules that defined refiners and importers of gasoline and diesel as the “obligated parties” responsible for demonstrating compliance with the standards. EPA set other requirements for renewable fuel producers and importers and other parties in the fuel distribution system to ensure the program would work. Renewable fuel producers generate credits corresponding to the biofuel produced and are required to pass these credits, known as “RINs,” along with the biofuel, through the distribution system. Obligated parties acquire RINs from blending biofuels or by purchasing them from other parties that blend biofuels. Then, the obligated parties submit an appropriate amount of RINs to EPA that corresponds to the volume of gasoline and diesel that the company provided to the domestic market.

Changing the point of RFS obligation would create additional uncertainty in the RFS program and in the RIN market and, as suggested in comments submitted to the EPA, could result in increased retail fuel costs. RFS compliance plans, investments and commercial agreements that were premised on the current structure would be disrupted. Others have highlighted that such a major structural change a decade into the program creates additional uncertainty about other critical components of the program.

Explore other API resources on the Renewable Fuel Standard and the Point of Obligation

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What They Are Saying: The Point of Obligation

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