Ethanol RIN Volatility has Consequences for US Trade Volumes

The Renewable Identification Number (RIN) market administered by the US Environmental Protection Agency (EPA) has largely been a boondoggle from its inception. A RIN is a number assigned to individual batches of biofuel that are then used by regulated entities to prove that they are in compliance with the EPA’s Renewable Fuel Standard (RFS) program. Companies that produce more RINs than they need can sell the credits to those that need to purchase them in order to be in compliance. Not unlike other purported market solutions for mandating increased renewable energy production, the tradable RIN market has been beset by wild volatility and frequent cases of fraud. EPA in fact estimated in 2012 that there were approximately 140 million illegitimate credits in circulation. Download here