Commodities

Biodiesel is an alternative fuel produced from domestically available renewable resources. While the term 'biodiesel' is often used loosely in the public domain to refer to things such as waste vegetable oil taken directly from deep fryers, there are strict quality standards that must be met for a fuel to properly be considered biodiesel. The criteria is laid out by the American Society for Testing & Materials under code 'ASTM D-6751'.

Biodiesel contains no fossil fuels itself but is generally blended with conventional diesel for use as a transportation fuel. Blends can range from 1 to 99%. The more common ratios are referred to as B2, B5, B10 and B20 (containing 2, 5, 10 and 20% biodiesel respectively).

The virtues of biodiesel use are similar to those of ethanol; reduced dependence on foreign petroleum and fewer greenhouse gas emissions. However biodiesel can also claim the highest fossil energy balance of any transportation fuel. Both the USDA and the DOE have taken into consideration all the energy used in getting biodiesel to the pump, and determined that for every unit of fossil energy used in production, 3.2 units of energy are produced.

PFL is an active participant in the brokering of biodiesel. Please contact us if you would like to receive our daily market report.

Additional Information:

• Diesel History
• Biodiesel Facts
• Biodiesel Technical Standards

The Renewable Identification Number (RIN) program is a crucial component of the Renewable Fuel Standard (RFS) in the United States, which was established to promote the use of renewable fuels in transportation. The RFS was created under the Energy Policy Act of 2005 and expanded under the Energy Independence and Security Act of 2007.

Its main objectives are to:

• Reduce greenhouse gas emissions.
• Enhance energy security by reducing dependence on imported oil.
• Promote the use of renewable fuels such as ethanol, biodiesel, and other advanced biofuels.

What is a Renewable Identification Number (RIN)? A RIN is a unique 38-character numeric code assigned to batches of renewable fuel. It acts as a tracking mechanism to ensure that renewable fuel producers and importers comply with the RFS.

How the RIN Program Works

Generation of RINs: Renewable fuel producers generate RINs when they produce a batch of renewable fuel. Each gallon of renewable fuel corresponds to a specific number of RINs, depending on the fuel type and its energy content.

Assignment and Separation: RINs are initially assigned to physical gallons of renewable fuel. When these fuels are sold, blended, or exported, the RINs can be separated from the gallons and traded independently.

Compliance Obligations: Obligated parties, typically refiners and importers of gasoline and diesel, must meet annual renewable volume obligations (RVOs). These RVOs are calculated based on the total volume of non-renewable fuel they produce or import. To meet their RVOs, obligated parties must submit an appropriate number of RINs to the Environmental Protection Agency (EPA) annually.

RIN Trading: Separated RINs can be bought and sold on the open market. This trading mechanism provides flexibility for obligated parties, allowing them to purchase RINs if they cannot produce or import enough renewable fuel to meet their obligations.

RIN Retirement: Once RINs are submitted to the EPA to demonstrate compliance with RVOs, they are retired and cannot be used again.

Types of RINs
RINs are categorized based on the type of renewable fuel and its associated greenhouse gas reduction requirements.

• D3: Cellulosic biofuel
• D4: Biomass-based diesel
• D5: Advanced biofuel
• D6: Renewable fuel (usually corn-based ethanol)
• D7: Cellulosic diesel

Benefits and Challenges

Benefits:

• Environmental: Reduces greenhouse gas emissions by promoting cleaner fuels.
• Economic: Stimulates investment in renewable energy technologies and infrastructure.
• Energy Security: Reduces dependence on imported fossil fuels by diversifying the energy supply.

Challenges:

• Market Volatility: The price of RINs can be volatile, leading to uncertainty for obligated parties.
• Fraud: There have been instances of fraudulent RIN generation and trading, prompting the need for stringent oversight.
• Implementation Complexity: The program requires accurate tracking and reporting, which can be administratively burdensome.

PFL acts on behalf of producers, refiners, blenders, importers, exporters and other energy market participants to facilitate RIN transactions. By leveraging years of expertise in the brokering of physical biofuels and utilizing our extensive network of customers, we work to ensure our clients satisfaction in all aspects of RIN execution.

Executive Order S-1-07, the Low Carbon Fuel Standard (LCFS) (issued on January 18, 2007), calls for a reduction of at least 10 percent in the carbon intensity of California's transportation fuels by 2020. It instructed the California Environmental Protection Agency to coordinate activities between the University of California, the California Energy Commission and other state agencies to develop and propose a draft compliance schedule to meet the 2020 target. Furthermore, it directed ARB to consider initiating a regulatory proceedings to establish and implement the LCFS. In response, ARB identified the LCFS as an early action item with a regulation which was to be adopted and implemented by 2010.

The types of transportation fuels to which the LCFS applies include:

• California reformulated gasoline (“gasoline” or “CaRFG”)
• California diesel fuel (“diesel fuel” or “ULSD”)
• Fossil compressed natural gas (“Fossil CNG”) or fossil liquefied natural gas (“Fossil LNG”)
• Biogas CNG or biogas LNG
• Electricity
• Compressed or liquefied hydrogen (“hydrogen”)
• A fuel blend containing hydrogen (“hydrogen blend”)
• A fuel blend containing greater than 10 percent ethanol by volume
• A fuel blend containing biomass-based diesel
• Denatured fuel ethanol (“E100”)
• Neat biomass-based diesel (“B100”)
• Any other liquid or non-liquid fuel

California’s Global Warming Solutions Act of 2006 (AB32) set a series of policies and programs across all major sectors to return California emissions to 1990 levels by 2020. The California Air Resources Board updates a Scoping Plan every 5 years to outline California's strategy to meet AB32 goals. The Cap and Trade Program caps greenhouse gas (GHG) emissions from key sectors in California, ensuring that AB32 GHG reductions are met.

The California Cap and Trade Program is designed to achieve cost-effective emissions reductions across the capped sectors. The Program sets maximum, statewide greenhouse gas (GHG) emissions for all covered sectors each year (the “cap”), and allows covered entities to sell off allowances An allowance is a tradable permit that allows the emission of one metric ton of CO2e. (permits) that they do not need (the “trade”). The California carbon price is driven by allowance trading.

By 2020, the Cap and Trade Program is expected to drive approximately 22% of targeted greenhouse gas reductions still needed in capped sectors after reductions from AB32’s complementary policies.

CAP AND TRADE PROGRAM DETAILS

The Cap and Trade Program covers the power and industrial sectors starting in 2013 and will expand to cover natural gas and transportation fuels in 2015 (see here for a helpful timeline). Once fully in effect, the program will cover roughly 85% of California’s GHG emissions. The California Air Resources Board auctions allowances to covered entities. Allowances are allocated freely to electric utilities to mitigate costs on customers. Utilities must use the value associated with the allowances to benefit ratepayers. Free allocation decreases over time. Regulated entities can also meet 8% of their obligations by buying CARB-approved offsets — emissions reductions from uncapped sectors.

Our NGL and Crude Desk excels in handling a wide range of NGL (Natural Gas Liquids) products, catering to diverse clients such as small propane retailers, global chemical majors, and producers. We offer comprehensive solutions for product transportation, utilizing pipelines, railroads, barges, or trucks, based on your company's specific requirements and flexibility.

Experience the power of our trading platform, which provides access to physical hub markets, as well as physical rail, barge, and truck markets throughout the United States. This brings unparalleled price transparency and increased market liquidity across North America. Leveraging our strong presence in the rail sector, we can seamlessly deliver product, transport, and storage solutions across the entire NGL spectrum.

Our offerings cover a broad range of both physical and financial products, encompassing all major North American hubs, including: Ethane, Propane, Butane and Iso-butane, Natural Gasoline, and Condensate.