restaurant rebates for used cooking oil

Decline in the value of RINs and their effect on restaurant rebates

Biofuel producers and used cooking oil collectors depend on government mandated RINs to financially support the price of biofuels, to keep them competitive with highly polluting diesel fuel. The EPA accomplishes this by quantifying RVOs (renewable fuel obligations) or quantities of biofuels that producers need to produce and blend each year. 

RINs (renewable identification numbers) are the tracking numbers assigned to each gallon of biofuel produced. Tracking these numbers allows the EPA to see that producers are meeting their obligations, the renewable fuel obligations.

RINs, their value and decline

RINs are created and assigned each time a gallon of biofuel is produced. (There are different classes of RINs such as D4 and d6).

RINs are tradeable between producers so one can purchase RINs if one hasn’t produced sufficient biofuels to meet their RVO. Thus RINs can go up and down in price. The price of a RIN has a significant impact on the price a biofuel producer receives for their fuel and hence what they will be able to pay for the feedstock they purchase to make biofuels.

This significantly impacts the profit of a biofuel producer as well as UCO collectors.

The fall of the House of RINs 

The price of a RIN fell 45% for biomass based diesel and ethanol in the first half of 2024. (EIA Biomass Magazine). This has contributed to a plunge in profits among used cooking oil collectors.

The price collapse seems to stem from inordinately low RVO quotas set by the EPA. Low quotas gave rise to an oversupply of RINs which dropped the price of the RINs and in turn the profits of producers and UCO collectors. A drop in profits for UCO collectors may well lead to a decline in rebates for restaurants.

How can the EPA rebuild the House of RINs?

The EPA is being urged to correct this egregious lapse by increasing the quantity of RVOs (renewable fuel obligations) for 2024 and 2025.

This will support the price of RINs and hopefully restore some profitability to the biofuels market and encourage more production.

A bipartisan group of 18 senators and representatives sent a letter to the EPA encouraging them to increase RVOs for the next two years.

China Exports virgin palm oil disguised as biodiesel fuel to fraudulently qualify for RIN credits.

A problem which originated several years ago in Europe has come to the United States. Dramatic increases in imported “used cooking oil” have been observed in US import statistics. What is happening is China is mixing UCO with virgin palm oil to claim RIN credits and higher profits. 

Palm oil is not a climate friendly renewable resource. The production of palm oil wreaks havoc on the environment and causes massive deforestation. It does not qualify for RIN credits. This flood of palm oil is beginning to cause havoc in the highly regulated biofuels market. The EPA needs to pay close attention and increase inspections, identification and enforcement action.

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