What Is The Renewable Fuel Standard?
The Renewable Fuel Standard, or RFS, was signed into law in 2005 by President George W. Bush as part of the Energy Policy Act. The RFS was later expanded under the Energy and Independence and Security Act of 2007. The law requires a certain amount of biofuels to be blended into gasoline each year in increasing amounts annually. These biofuels produce less greenhouse gases as they are burned and, therefore, are better for the environment than burning regular fuel. Use of the biofuels allows us less independence on oil, which was one of the goals for passing the RFS. The RFS also encourages investment and expansion into renewable fuel sources. The RFS is administered by the EPA.
To ensure RFS compliance, gasoline and diesel-fuel refiners must annually purchase a set amount of renewable fuels. The refiners are required to submit renewable fuel credits to the Environmental Protection Agency, or EPA, to show that they have covered their annual obligations. These credits, known as Renewable Identification Numbers, or RINs, are generated by the production of biofuels—one RIN is generated for each gallon of fuel in the RFS program—and can be bought and sold by refiners, as well as banked for future use.