Published on Wednesday, February 22 2023
Authors : Cinda Lohmann and Philip Guillemette

On December 30, 2022, EPA proposed a novel regulatory structure for producing RINs for renewable electricity (eRINs) and requiring gasoline and diesel fuel producers/importers (obligated parties) to acquire eRINs for compliance with the U.S. EPA Renewable Fuel Standard (RFS) under 40 CFR Part 80 Subpart M.  In brief, eRIN generation could start as early as 2024 along with cellulosic renewable volume obligations (RVOs), based in part on projected eRIN volumes of 600 million and 1.2 billion RIN-gallons for 2024 and 2025, respectively. 

EPA’s regulatory structure for eRINs presents several new (some may say revolutionary) aspects that will likely please both renewable electricity producers and electric vehicle (EV) manufacturers but will be clearly challenged by obligated parties.  Let’s take a ride down the Electric Avenue to see where there may be some bumps along the way.

RINs for Renewable Electricity

Although EPA finalized two biogas-to-electricity fuel pathways several years ago (see 40 CFR Part 80 Subpart M Table 1 to 80.1426), RINs have never been generated for renewable electricity nor has U.S. EPA set any renewable fuel volumes (RFVs) based on the production and use of renewable electricity.  In the past, U.S. EPA expressed concerns (see REGS Proposed Rule 81 FR 80828 11/16/2016) about how to assure eRIN validity, due to the complexity of number of parties involved in the renewable electricity value chain.  We anticipate that commenters to the proposal will question how RIN validity will be assured, as well as potentially challenging EPA’s authority to include electricity within a program that has historically encompassed only liquid and gaseous biofuels.  Another fundamental question is whether the U.S. Congress intended electricity to be considered a renewable fuel when debating and passing Title II of the Energy Independence and Security Act (EISA) way back in 2007.

RIN Generation by EV Manufacturers

Throughout the entire RFS history, U.S. EPA has provided RIN generation responsibility exclusively to renewable fuel producers.  However, in this proposal U.S. EPA plans to assign this authority to EV manufacturers.  Clearly, this is a regulatory paradigm shift that is bound to “raise eyebrows” and question the basis for this regulatory exception.  On the surface, one would expect that RIN generation should be assigned to the renewable electricity producer, as the entity assuring that the renewable electricity is produced from biomass-based biogas or renewable natural gas (RNG). 

Renewable Electricity by Indirect Consumption

In the proposal, EPA does not intend for the renewable electricity to be directly consumed by EVs.  EV Manufacturers will be permitted to contract with renewable electricity generators connected to the Lower 48 state electrical grid to obtain exclusive use of “environmental attributes” assigned to renewable electricity production.  This paperwork exercise will likely be “piled-on” to the RNG regulations which will also allow renewable electricity generators to obtain the “environmental attributes” assigned to RNG and not directly consume RNG produced from biogas.  We expect that comments will question this framework based on indirect and not actual renewable fuel use.

RINs Generation and Separation Based on Consumption Estimates

Finally, EPA has proposed for EV manufacturers to generate, separate, and sell eRINs based on an estimated amount of electricity consumed by light-duty EVs produced and in-use in the Lower 48 states.  Using estimates versus actual measured quantities of renewable fuels is a significant departure from how the regulations are currently structured, which have clear requirements related to measuring renewable fuel quantities.  We fully expect that EPA will receive comments indicating that RIN separation should occur at a point “downstream” where the renewable electricity is distributed and measured for actual use by EVs (e.g., load-serving entity, vehicle charging network, vehicle telemetry data, etc.).  Of course, allowing EV manufacturers to generate revenue from eRIN sales that are paid for through consumer purchases of gasoline and diesel fuel at the pump brings on another public policy discussion, but we’re not going to get into that right now. 

In summary, we think that this ride down the Electric Avenue might be a little bumpy for all interested parties.  Please let us know if Turner, Mason and Company can help you navigate the journey. You can reach us at contact@turnermason.com.