Estimating Carryover RINs Available for Use in 2014

Dallas Burkholder, Office of Transportation and Air Quality, US EPA

November 2015

Summary

As a result of the delay in establishing the 2014 RFS standards, EPA has also delayed the 2013 compliance deadline. The precise number of 2013 RINs that will be available for use by obligated parties towards the 2014 standards (carryover RINs) is therefore not know n

. It is possible, however, to estimate the number of carryover RINs available for use in 2014
based on the data available at this time. In general, this can be done by first calculating the number of 2012 RINs available for use towards satisfyi ng the 2013 obligations based on the 2012 compliance information. We then compare the number of RINs available for compliance in 2013, including both RINs generated in that year and 2012 carryover RINs available for use towards the 2013 standard, to the R FS standards for 2013. The difference

between these two sums is our estimate of the potentially available 2013 carryover RINs for use in 2014. In this final rule we are establishing the RFS standards for 2014 and 2015 at levels equal to our projection of renewable fuel supply in these years. This means that we do not expect that the number of carryover RINs available will increase or decrease as obligated parties comply with the 2014 and 2015 standards, and therefore the number of carryover RINs availabl e for use in 2014 will be approximately equal to the number of carryover RINs available for use in 2016.

Calculating the Number of 2012 Carryover RINs Available for Use in 2013

To calculate the number of 2012 carryover RINs available for use in 2013 we begin with the number of 2012 RINs that are currently available for use (RINs that have not been retired) , as indicated in EMTS . This information is shown in Table 1 below.

Table 1
2012 RINs that Have Not Been Retired

D3 RINs D4 RINs D5 RINs D6 RINs D7 RINs
20,069 176,664,744 121,157,993 1,505,125,791 1,741

The number of 2012 RINs that may be used for 2013 compliance is not, however, simply equal to the number of 2012 RINs that are currently available for use. This is because some obligated parties have already retired 2012 RINs in EMTS towards their 2013 complianceobligations. 1 The total number of 2012 RINs project ed to be available for use towards

satisfying the 2013 RFS obligations is equal to the sum of the 2012 RINs that EMTS
indicates are currently available, plus the 2012 RINs already retired towards 2013 R FS obligations. These numbers are shown in Table 2 be low , along with the sum of the two numbers which is the total number of 2012 RINs that can be used for compliance in 2013

. We also compare the total number of 2012 carryove r RINs for each category to 20% of the 2013 standards to see if the 20% carryover l imit will impact the use of any 2012 carryover

RINs in 2013 in Table 3. The 20% carryover limit is not constraining for any of the RIN categories.

Table 2 Total Number of 2012 RINs Available For Use Towards Meeting the 2013 Obligations

D3 RINs D4 RINs D5 RINs D6 RINs D7 RINs

Available 2012 RINs 20,069 176,664,744 121,157,993 1,505,125,791 1,741

2012 RINs Retired

To Meet 2013 Obligations 0 91,796,832 46,144,741 618,115,597 0 Total 2012 Carryover

RINs 20,069 268,461,576 167,302,734 2,123,241,388 1,741

Table 3 2012 Carryover RINs and 2013 Carryover Limits

Total
Cellulosic RINs (D3+7) Total BBD

RINs (D4) Total Advanced

RINs (D3+D4+D5+D7) Total Renewable

Fuel RINs (all D codes)

Total 2012 Carryover RINs 21,810 268,461,576 435,786,120 2,559,027,508

2013 Standards 810,185 1,920,000,000 2,750,000,000 16,550,000,000 2013 Carryover Limit (20% of Standard) 162,037 384,000,000 550,000,000 3,310,000,000 Carryover RIN Use Limited by Cap? No No No No

Estimating the Number of 201 3 Carryover RINs Available for Use in 201 4

Unlike in 2012, the compliance deadline has not yet passed for 2013, so we must estimate,
rather than calculat e, the number of 2013 RINs available to be used for compliance with the 2014 standards after meeting the 2013 standards. To estimate the number of carryover RINs available for use in 201 4

, we first added the number of 2012 carryover RINs available

1 The number of 2012 RINs retired for 2013 compliance is available in the EMTS system, however this data is not publicly reportedfor use in 2013 to the number of RINs generated in 2013. We then subtract the RINs that

were retired for reaso n s other than compliance with the 2013 standards (adjustments), and the RINs which must be retired for exported biofuel. These calculations are shown in

Table 4 below.

Table 4

Estimating RINs Available for 2013 Compliance

Total
Cellulosic RINs (D3+7) BBD RINs

(D4) Advanced

Biofuel RINs (D5) Conventional

Renewable Fuel RINs (D6)

2012 carryover RINs Available for

Use in 2013 21,810 268,461,576 167,302,734 2,123,241,388

RINs Generated in

2013 818,517 2,739, 133

, 319 557, 824

, 688 13,350, 496

, 387

RINs Retired for

Non

- Compliance Purposes 8,332 100, 773

, 533 6, 316

, 175 108, 158

, 411 RINs Expected to
Be Retired for Exported Biofuel 0 297, 554

, 287 0 407, 399

, 931

Total RINs
Available for Compliance in

2013 831,995 2,609,267,075 718,811,247 14,958,179,433

Finally, we compared the number of RINs available for use in 2013 (including both 2012 carryover RINs and RINs generated in 2013, minus RINs retired for non

- compliance reasons and RINs retired for exported biofuel) to the 2013 standards. The difference
between these two numbers, shown in Table 5 below, is equal to the estimated number of 2013 carryover RINs available for use in 2014.Table 5 Estimated number of 2013 Carryover RINs Available for Use in 2014

Total
Cellulosic RINs (D3+7) Total BBD

RINs (D4) * Total Advan ced

RINs (D3+D4+D5+D7) Total Renewable

Fuel RINs (all D codes)

Total RINs
Available in 2013 831,995 2,609,267,075 3,328,910,317 18,287,089,750

2013 Standards 810,185 1,920,000,000 2,750,000,000 16,550,000,000 2013 Carryover
RINs Available in

2014 21,810 689,267,075 * 578,910,317 1,737,089,750
*This calculation assumes that no BBD RINs are retired in excess of the BBD standard. In practice additional BBD RINs are expected to be retired to satisfy obligated parties advanced and total renewable fuel obligations. The total number of carryover BBD RINs will not exceed the number of total advanced carryover

RINs calculated in this table.

These calculations indicate that approximately 1.74 billion carryover RINs generated in

2013 would be available for use towards meeting the 2014 RFS standards. Of these 1.74 billion RINs, we estimate that approximately 579 million of these are advanced biofuel RINs (D3, D4, D5, or D7). We estimate that the majority of these 579 million advanced
biofuel RINs are BBD RINs. While Table 5 above shows a difference of a pproximately 689

million BBD RINs between the amount available and the amount needed to satisfy the 2013 standards, in reality we do not know precisely how many BBD RINs were retired in excess of the BBD standard to comply with the 2013 advanced and total standards

. We do know, however, that the total number of RINs available that can be used towards the advanced biofuel standard is approximately 579 million, and therefore the number of BBD RINs
available cannot exceed this number. Because we are establis hing RFS standards for 2014 and 2015 that are projected to be equal to the number of RINs available for compliance in these years, we anticipate that approximately 1.74 billion carryover RINs will also be available for compliance in 2016.

We note, howeve r, that there are several factors that may reduce the number of carryover
RINs that are available for compliance with the 2016 standards

. A small number of obligated parties forward RIN deficits from 2012. Satisfying t hese deficits will require the

retir ement of additional RINs beyond the number required by the 2013 standards. Any additional RINs retired to satisfy deficits carried forward into 2013 would result in fewer carryover RINs being available in for 2014, and thus for 2016

. In addition, enforcement

actions in previous years hav e required parties that generated invalid RINs, or relied on invalid RINs for compliance

, to acquire valid RINs

. The aggregate sum of such additional RIN purchases has totaled over 100 million RINs. Because it is not possible to generate additional RINs in 2014 and 2015, RINs retired due to new enforcement actions would effectively reduce the number of carryover RINs available for use in compliance with the

2016 standards

. The 2016 RINs retired due to enforcement actions would not technically
need to be carryover R INs , but to the extent that 2016 vintage RINs were used for such purposes they would not be available for compliance with the 2016 standards, and obligated parties would need to rely on an equal number of carryover RINs to meet their 2016 obligations

. Because of these uncertainties, it is best to view our estimate of 1.74billion carryover RINs available for use in 2014, and therefore available for use in 2016, as

the upper limit. The actual number of RI Ns available for compliance with the 2016
standards may, in fact, be significantly less than this number.