Love biofuels? API turns to online matchmaking

Greenwire, 21 March 2008 - The American Petroleum Institute launched an online marketplace yesterday that enables petroleum refiners, blenders and importers to identify sellers of renewable fuels credits.

The API Credit Exchange, dubbed ACE, comes three months after President Bush signed into law an energy bill that requires the nation to consume 9 billion gallons of ethanol, biodiesel and other renewable fuels this year. The consumption requirement revs up to 36 billion gallons a year annually by 2022 (Greenwire , Dec. 14, 2007).

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U.S. EPA, meanwhile, has set up a renewable fuels credit trading program to ensure that the petroleum industry complies with the federal renewable fuel standard. Buyers and sellers of renewables fuels credits, each with its own EPA-designated renewable identification number (RIN), must register their transactions with the federal agency.

That is where API would serve as a sort of virtual deal broker. EPA-bound parties, such as global oil majors and small-time blenders, can now post their biofuel needs and ask price on the ACE site. If the price is right, biofuel producers can click on the site for the buyer's contact information.

Actual trading would happen offline between the parties, said Patrick Kelly, a downstream associate with API.

"Because the renewable fuels credit market will be much tighter, everyone's looking for some liquidity and ease in finding a buyer and seller," he explained. "We want to make sure every RIN is counted."

ACE membership is open to any fuels producer, refiner or blender. Registration on the site costs between $1,000 and $1,500 for the first year.

To help traders comply with EPA reporting requirements, API will compile germane trading data into electronic spreadsheets.

As of this morning, no companies had registered with the new exchange, said Kelly, whose Washington, D.C.-based trade group represents 400 oil and gas corporations.

"We're hoping to get a few of our larger members, as well as small and mid-size companies, to join," Kelly said.

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