Aventine Renewable Energy files for bankruptcy protection, says company will re-emerge stronger

In Illinois, Aventine Renewable Energy filed for voluntary Chapter 11 bankruptcy reorganization, citing economic conditions, plus ethanol and feedstock prices back to last summer as primary causes. The company said that industry capacity had exceeded demand despite increases in the 2009 Renewable Fuel Standard, and said that fuel blenders have been reducing ethanol purchases and submitting excess RIN (renewable Information Number) credits from past purchases to cover their ethanol blending obligations.

The company said that, as the excess supply of RINs was reduced and the RFS mandates increased and created more demand, the company’s prospects were strong.

Commenting on the filing, Clean Fuels Clearinghouse president Clayton McMartin said, “There is a growing concern across the industry that these excess [RIN] credits may instead be the result of fraud and duplication of RINs, a problem that EPA is likely to address in 2011.  Considering that an estimated 20% of ethanol capacity is presently shut down, with more to follow, most projections would have US ethanol production rates at 9.0 Billion Gallons/Yr today and dropping.   Recognizing that the mandate for renewable fuel is 11.1 BGY in 2009, with the only way to legitimately generate a RIN being to produce another gallon of renewable fuel, the math doesn’t add up.  Even when considering biodiesel’s contribution to the pool, the trend should in fact be a deficit, not an excess of RINs.

EPA has announced plans to address market confidence issues with the development of the Moderated Transaction System (MTS).  MTS would serve as a federal registry for RINs and would be part of the advanced renewable fuel standard, which has yet to be released but with an anticipated effective date of Jan 1, 2011.  Polling conducted during a March 5 webinar rebroadcast of EPA’s maiden MTS presentation revealed that companies are very concerned about lack of confidence in the new fuel credit market. 75 percent of companies participating in the webinar said they were concerned about fraudulent or invalid RINs in the marketplace”.  

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