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Explaining the point of obligation

Rumored changes to the Renewable Fuel Standard (RFS) have brought attention to how the point of obligation works under the RFS.

American Coalition for Ethanol (ACE) executive vice president Brian Jennings calls the point of obligation the compliance mechanism EPA uses to ensure renewable fuels get blended into motor fuel.

“About 150 companies that are refiners and importers shall be the parties that are obligated to comply with the RFS.  Meaning, they have to turn in the blending incentives: the Renewable Identification Number (RIN).”

He says refiners like Valero and investors in refineries like Carl Icahn (eye-con) want to move that compliance burden to smaller businesses, which could negatively impact the ethanol industry.

“We are very concerned that shifting the point of obligation from only 150 refiners and importers to potentially a thousand or more marketers, suppliers, and wholesalers, could really cause problems.”

Jennings says issues with enforcing the RFS and its ability to drive higher volumes of renewable fuels could arise.

Speculation that President Trump was considering an executive order changing the point of obligation from refiners to position holders at the terminal began last week following a press release from the Renewable Fuels Association.

The White House has maintained an executive order involving the RFS does not exist.