Historical Beginnings of the RINs Market and Its Underpinning Laws




Origins in the Energy Policy Act of 2005

The RINs market began with the Energy Policy Act of 2005, which established the first Renewable Fuel Standard (RFS) program in the United States. This landmark legislation created the foundation for what would become the RINs trading system.

Expansion Under the Energy Independence and Security Act of 2007

The program was significantly expanded by the Energy Independence and Security Act (EISA) of 2007, which established RFS2. This legislation:

  • Increased the volume of renewable fuel required to be blended into transportation fuel
  • Created specific categories of renewable fuels with different greenhouse gas reduction thresholds
  • Extended the program's reach beyond gasoline to include diesel fuels

The Creation of RINs

Renewable Identification Numbers (RINs) were established as the compliance mechanism for the RFS program. Each RIN is essentially a 38-character serial number assigned to batches of renewable fuel, functioning as both:

  • A tracking mechanism for renewable fuel volumes
  • A tradable credit for compliance purposes

The RINs Market Development

The EPA implemented regulations that allowed obligated parties (refiners and importers) to:

  • Generate RINs through renewable fuel production or importation
  • Buy RINs from other parties to meet their Renewable Volume Obligations (RVOs)
  • Bank or trade RINs within certain limitations

This created a cap-and-trade style market that has grown in complexity and value over time, with different RIN categories (D3, D4, D5, D6, etc.) representing different biofuel types.

Key Regulatory Developments

The RINs market has evolved through numerous EPA rulemakings, court decisions, and policy adjustments, including:

  • Annual volume requirement determinations
  • Pathway approvals for new feedstocks and production methods
  • Small refinery exemption policies
  • RIN quality assurance programs to address fraud concerns

Market Impact

The RINs system has become a multibillion-dollar market that significantly influences renewable fuel production, petroleum refining economics, and transportation fuel prices across the United States.

This market-based approach has helped drive substantial growth in the biofuels industry while providing flexibility for obligated parties to meet renewable fuel requirements in the most cost-effective manner.