If you’ve dipped your toes into the world of the Renewable Fuel Standard (RFS), you’ve likely bumped into the term RINs (Renewable Identification Numbers). These aren’t just random digits; they are the “currency” of the RFS program.
However, a RIN’s value and function change depending on its status. That status is defined by its K-Code also known as its assignment code. Let’s break down the difference between K1 and K2 RINs without the headache.
What is a RIN?
Think of a RIN as a digital tracking certificate assigned to each gallon of renewable fuel. When ethanol or biodiesel is produced, a RIN is generated to monitor its movement through the supply chain. We have previously covered a detailed breakdown of what a RIN is and how it functions within the program. This tracking system allows the EPA to verify that obligated parties, such as refiners and importers, are meeting their required renewable fuel blending requirements under the Renewable Fuel Standard.
K1: Assigned RINs
When first created, a RIN is “assigned” to a specific batch of renewable fuel and labeled with a K-Code of 1 (K1).
Assigned RINs must travel with the physical fuel. If a shipment of ethanol is sold with K1 RINs, those RINs remain attached to the fuel throughout the supply chain. This ensures that renewable fuel is physically moving toward consumption.
K1 RINs are typically held by producers, importers, and wholesale blenders. Because federal regulations require assigned RINs to move with fuel, they cannot be traded independently.
K2: Separated RINs
A RIN becomes separated when it is detached from the physical gallon of fuel, usually during blending or when purchased by an obligated party. Once separated, it receives a K-Code of 2 (K2).
Separated RINs can be traded independently of the fuel. This flexibility allows refiners and importers to purchase RINs on the open market to meet annual Renewable Volume Obligations (RVOs) if they have not blended enough renewable fuel themselves.
K2 RINs function as a compliance commodity and are bought and sold electronically through systems like the EPA’s EMTS.
Differences at a Glance
| Feature | Assigned (K1) | Separated (K2) |
|---|---|---|
| Connection | Attached to physical fuel | Detached |
| Marketability | Must be sold with the fuel | Can be sold independently |
| Who needs them? | Producers and blenders | Refiners and importers (for compliance) |
| Code | K-Code 1 | K-Code 2 |
How RIN Status Impacts Pricing
For K1 RINs, the credit value is built into the price of the physical gallon of biofuel. Buyers purchasing renewable fuel with assigned RINs are paying for both the liquid fuel and the attached compliance value.
K2 RINs, however, trade as standalone financial instruments. Their value fluctuates based on factors such as EPA Renewable Volume Obligations, feedstock costs, and market supply. When blending requirements increase or renewable fuel supply tightens, separated RIN prices often rise quickly.
Why Does It Matter?
The separation of RINs into K2 status creates flexibility in the RFS market. Without separated RINs, obligated parties would need to physically own and blend renewable fuel for every compliance credit required. Instead, the K1-to-K2 transition allows credits to flow through the market efficiently.
How RINSTAR Can Help
Understanding the difference between assigned (K1) and separated (K2) RINs is essential for managing Renewable Fuel Standard compliance, but keeping track of RIN status, pricing, and transfers requires more than basic knowledge. It requires organized data, accurate reporting, and constant visibility. That’s where RINSTAR provides value.
- Stay Organized: Centralize RIN inventory, transaction records, and supporting documentation in one secure platform. Easily track RIN status from generation through separation and transfer, ensuring full visibility into your compliance position.
- Ensure Accuracy: Automated tracking and reporting tools help align EMTS activity with internal records, reducing discrepancies and minimizing the risk of reporting errors or compliance gaps.
- Monitor Compliance: Maintain real-time insight into assigned and separated RIN holdings, trading activity, and Renewable Volume Obligation needs so your organization is always prepared for audits and reporting deadlines.
- Expert Guidance: With more than 15 years of Renewable Fuel Standard experience, the RINSTAR team helps companies interpret regulatory requirements, manage RIN workflows, and confidently navigate the complexities of the RIN market.
With RINSTAR, you gain a trusted partner dedicated to keeping your organization organized, compliant, and prepared for every stage of the RFS lifecycle.
📩 Have questions? Contact us at services@cfch.com or schedule a demo to see how RINSTAR can support your RFS and RIN management strategy.
