Groups jockey for advantage in ‘eRIN’ market as RFS ‘set’ plan looms

Source: By Inside EPA • Posted: Wednesday, November 30, 2022

Producers and distributors of electricity used in transportation are jockeying with each other and liquid biofuel producers to receive renewable fuel standard (RFS) compliance credits under a novel framework EPA will include in its imminent “set” proposal that will fix RFS biofuel blending mandates for 2023 and beyond.

EPA faces a Nov. 30 consent decree deadline to belatedly propose its “set” rule that will establish the 2023 and later RFS blending requirements, setting volumes for several years under its own authority for the first time across all biofuel categories after statutory targets expire at the end of 2022.

Part of the proposal will create a framework to grant electronic renewable identification numbers (eRINs) for the first time for electric power derived from biomass and used to power vehicles. This is controversial for several reasons — EPA must decide how many eRINs to allocate, and it has not yet determined which entities it will grant them to.

The eRINs will likely qualify as “D3” RINs, also awarded to cellulosic biofuels that include liquid biofuels such as cellulosic ethanol and to the biogas that has so far helped make up a major shortfall of liquid cellulosic fuels. Production of liquid fuels in this category has fallen far short of the statutory RFS goals. Cellulosic fuels must attain a 60 percent greenhouse gas cut relative to gasoline under the RFS.

For now, the proposal remains under White House Office of Management and Budget (OMB) pre-publication review. However, an EPA spokesperson says, “The Agency will meet the deadline for signature of the Renewable Fuels Standard Program’s proposed ‘Set Rule.’ After signature, the agency will make the proposal available for public review and comment.”

One biogas industry source who met with OMB officials recently says of the framework, “what it looks like is very opaque,” but biogas producers are adamant that they or other generators of RFS-qualified electricity for transportation should receive eRINs, and not others such as electric vehicle (EV) producers or companies providing charging infrastructure.

“It needs to be the biogas producer that gets the RIN,” the source says.

Biogas producers are also lobbying OMB and EPA to “significantly” increase the “equivalency value” allocated to electricity to determine how many RINs producers are awarded. Using a higher equivalency value would give electricity producers more RINs per unit of power produced.

EPA has previously used an equivalency value that greatly underestimates the GHG-reduction potential of electricity in documents such a never-finalized 2016 rule that proposed a host of technical changes to the RFS, the source says.

BTR Energy, a company specializing in boosting EV use as part of low-carbon energy markets, in a presentation to OMB at a Nov. 16 meeting urged EPA to increase its historic equivalency value.

“Assigning a more accurate equivalence value to electricity in the Set Rule will have a significant impact on participation in the RFS program and its future growth. It will also help level the playing field in terms of the RFS program’s incentives to produce different types of renewable fuels from available feedstocks, and ensure that RIN generation is more evenly aligned with the ability of those fuels to power vehicles and displace fossil fuel-based gasoline or diesel,” the group says.

BTR says that under existing RFS rules, “EPA has assigned an equivalence value of 1.0 (i.e., 22.6 [kilowatt-hour, or kWh] per RIN) to electricity. However, based on calculations using EPA data, including fuel efficiency ratings and production share percentages for all 2021 light-duty vehicles (both EVs and conventional vehicles), we believe an equivalence value of 4.3 (i.e., 5.25 kWh per RIN) would be much more accurate.”

EV Chargers

Meanwhile, charging infrastructure provider EVgo in a Nov. 21 presentation to OMB says: “Public charging owners and operators should be allocated the portion of credits which occur on a public charging network. This will ensure public charging station owners and operators are included in the E-RIN value chain, which will be necessary to better incentivize investment in charging infrastructure, consistent with the Biden Administration’s goals of building 500,000 electric vehicle charging stations.”

EVgo’s bid for eRINs comes as others, such as EV manufacturers, have reportedly also lobbied the White House for a share of the eRINs, highlighting a dilemma for EPA in distributing the new credits.

EVgo argues against allocation of too many RINs to automakers. “Any program which does not establish a pathway for public charging station owners to generate E-RINs removes any inducement from the RFS for additional investment in charging infrastructure, contrary to the Administration’s goals for rapid station build-out. This is important because public fast charging infrastructure is the most capital intensive and would only realize the most marginal of downstream benefits if other entities like automakers are allocated 100% of the value of the E-RIN.”

Biofuels groups have also been pressing OMB and EPA to not reduce the share of RINs available to producers of liquid cellulosic fuels in order to make space for electricity producers.

One biofuels industry source says, “total volumes for advanced biofuels should drive new growth in capacity, as Congress intended, which will also ensure there’s no cannibalization of other RIN pools.” Under the RFS, advanced biofuels must achieve a 50 percent GHG cut relative to gasoline, so cellulosic biofuels with their greater GHG reductions can qualify for this category, which also includes much biodiesel.

Biofuels groups are making two further points regarding EPA approval of “pathways” for eRIN generation. “EPA review of new e-RIN pathways shouldn’t be allowed to push long-overdue reviews of advanced biofuel pathways (e.g. fiber) to the back of the line,” and “e-RINs need to be held to the same rigorous standards as other energy sources, whomever they go to.”

Producers of liquid cellulosic and advanced biofuels have long complained that EPA is dragging its feet in approving their production methods for RIN credits, such as for corn kernel fiber-derived fuel. They further worry that eRINs may be vulnerable to fraud.

EPA to date has declined to allocate eRINs because of the technical difficulty of ascertaining how the electricity is used, which critics say could result in fraudulent double-counting of RINs.

Environmental groups are also warning that eRINs will be open to fraud, and say such credits would not be environmentally beneficial because feedstocks such as biogas or landfill gas are not truly sustainable. — Stuart Parker (