Changing Its Mind: EPA to Withdraw eRINs from Final “Set” Rule

June 14, 2023

Have you ever done something and then, upon introspection, changed your mind? Committed to going out on a Friday night when you really wanted to stay in with your fuzzy slippers, security blanket, and a TV series that you’ve seen 100 times, perhaps? EPA might know a little about this with the recent chatter about it withdrawing its proposed eRIN program as part of the upcoming “Set” rule.

Last December, EPA published a massive “Set” proposal, which included provisions for eRINs. Under the proposed “Set” rule, eRINs would be rolled into the existing regulations within the Renewable Fuel Standard (RFS). EPA spent over 100 pages (I should know, I read them) creating this system and justifying its existence within the RFS.

So, if EPA took that many pages to develop this program, why the change of heart? The biggest reason for the change is fear of impending lawsuits. To be clear, rolling eRINs into the current RFS, is not a clean integration. The regulations are tailored for liquid fuels and adding RINs that are generated from renewable electrons (basically) is not a “best fit” scenario. EPA has already heard rumblings of threats of lawsuits from other RFS participants.

Additionally, commentors on the proposed rule have expressed hesitation over OEMs controlling so much of the eRIN generation and separation process. Right now, on the liquid fuel side of things, the ability of RINs to be generated is held by renewable fuel producers and the ability of RINs to be separated is held by blenders of renewable fuel. Both entities share and appreciate a certain control or advantage over their market positions. In the current proposal, however, OEMs would function as both producers and blenders. As such, commentors have theorized that OEMs would hold an unfair market position, potentially resulting in a significant disadvantage for the rest of the market.

Does this recent change of mind mean that eRINs are gone for good? No, I don’t think so. The Biden administration has already stated that while the eRIN program may be “uncoupled” from the Set rule, they want to institute a program by the end of this year. This could mean that the Biden Administration creates an entirely new body of legislation just for eRINs or it could mean that it rolls them into the RFS in a different way, later in the year.

So, what will EPA do? Will the eRIN provisions be conspicuously missing? I guess we’ll find out when the rule comes out!