Regulation of Fuels and Fuel Additives: Renewable Fuel Standard ...

4. Provisions For Exporters Of Renewable Fuel
As described in Section III.D.2.a, we believe that U.S. consumption of renewable
fuel as motor vehicle fuel can be measured with considerable accuracy through the
tracking of renewable fuel production and importing records. This is the basis for our
proposed RIN-based system of compliance. However, exports of renewable fuel must be
accounted for under this approach. For instance, if a gallon of ethanol is produced in the
U.S. but consumed outside of the U.S., the RIN associated with that gallon should not be
valid for RFS compliance purposes since the RFS program is intended to require a
specific volume of renewable fuel to be consumed in the U.S. Exports of renewable fuel
currently represent about 5 percent of U.S. production.
To ensure that renewable fuels exported from the U.S. cannot be used by an
obligated party for RFS compliance purposes, the RINs associated with that exported
renewable fuel must be removed from circulation. Ideally the producer of the exported
renewable fuel would simply not create RINs for those batches. However, in the fungible
distribution system it is common for exportation of fuel to occur without the knowledge
of the producer. As a result, we cannot rely on the producers to know which batches will
be exported and to not generate RINs for those batches. Another approach would be to
increase the obligation placed on refiners, importers, and blenders of gasoline based on
the volume of renewable fuel exported. Obligated parties would thus acquire RINs to
meet the standard described in Section III.A, and would also be required to acquire RINs
to cover the volume of renewable fuel exported. However, this approach would not only
require an estimate of the volume of renewable fuel exported in the next year, but would
also mean that every obligated party would share in accumulating RINs to cover the
exports.
Given these drawbacks, we believe that these two approaches would be
unworkable. As a result, we believe that it should be the exporter's responsibility to
account for exported renewable fuel. The most straightforward mechanism to accomplish
this would be to assign an RVO to each exporter that is equal to the annual volume of
renewable fuel it exported. Just as for obligated parties, then, the exporter would be
required to acquire sufficient gallon-RINs to meet its RVO. If the exporter purchased
renewable fuel directly from a producer, that renewable fuel would come with associated
gallon-RINs which could then be applied to its RVO under our proposed program. In this
circumstance, the exporter would not need to acquire RINs from any other source. If,
however, the exporter received renewable fuel without the associated RINs, it would need
to acquire RINs from some other source in order to meet its RVO.
As discussed in Section III.D.2.c, it may be possible to eliminate the need for
RINs altogether in specific circumstances involving exports of renewable fuels. For
instance, if the exporter was wholly owned by a renewable fuel producer, there would be
no need to generate RINs for the exported product. Likewise if a renewable fuel
producer specifically and explicitly earmarked a batch of renewable fuel for export, there
would be no need for a RIN to be generated. However, in both of these cases the
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