The RIN Market as a New Stage in the Development of Environmentally Friendly Fuels

Since the signing of the US Energy Policy Act of 2005 by US President G. W. Bush a new market has been organized for trading a specific financial asset called Renewable Identification Numbers (RIN). RIN is a security, whose price is a tax stimulating fuel blenders and consumers in the USA to use more ecological fuels. The aim of this working paper is to introduce Russian readers to the basics of the RIN market, as information about the market is still scarce in Russian. In particular, we discuss such significant factors influencing the RIN market as mandate and blend wall. We also note the close link of the number of RINs in circulation with ethanol production. In the nearest future the problem of ethanol overproduction is likely to arise in the USA which might be resolved by its export to the EC and Canada. The possible dynamics of the RIN market in that respect are certainly of interest. Finally, although the market is still young, some large-scale cases of fraud have already been revealed. Those cases have attracted attention of regulators and may soon provide a reason for revision of RIN market rules.