Renewable Fuel Standard Update: Recent EPA Activity Drives RIN Value

On December 7, 2021, the U.S. Environmental Protection Agency ("EPA") released its proposed 2020, 2021, and 2022 Renewable Volume Obligations ("RVOs"). RVOs determine the amount of renewable fuel (typically, ethanol) certain fuel refiners and others involved in the transportation fuel supply chain ("Obligated Parties") are required to blend into their own fuel production during a given year. Obligated Parties failing to meet their RVOs for any year must buy Renewable Identification Numbers ("RINs") or other credits, or risk default under the Renewable Fuel Standard ("RFS").

Each of the EPA's proposed targets was lower than targets previously set by the Energy Independence and Security Act of 2007 ("EISA"). In explaining the shortfall, the EPA cited the COVID-19 pandemic and a resulting drop in transportation fuel demand.