Vertex Energy Inc, a prominent U.S. energy company, is facing a requirement to retire over 18.7 million Renewable Identification Number (RIN) credits by March 31, 2025, as part of a proposed Consent Decree and Environmental Settlement Agreement with the U.S. government. This action aims to satisfy the company’s Renewable Fuel Standard (RFS) blending obligations for 2023 and 2024, according to a filing from the U.S. Department of Justice (DOJ).

Vertex Energy, which in mid-2021 acquired a refinery in Mobile, Alabama, initially announced plans to convert a portion of the facility for renewable diesel production. By mid-2023, the refinery’s renewable diesel unit was operating at phase 1 capacity of 8,000 barrels per day. The company had projected a phase 2 expansion to increase production to 14,000 barrels per day by the first quarter of 2025.

However, in May 2024, Vertex announced that it would shelve its renewable diesel production plans at the Mobile refinery, citing challenging market conditions. The company ceased renewable diesel operations at the refinery in August 2024, opting instead to revert the facility to fossil fuel production. This decision was followed by Vertex’s filing for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas in September 2024. The company indicated that it was exploring the potential sale of the Mobile refinery.

Vertex's financial troubles have led to significant legal proceedings, including the lodging of a proposed Consent Decree and Environmental Settlement Agreement by the DOJ on December 17, 2024. Under the terms of the proposed agreement, Vertex must retire a total of 18.7 million RINs by the end of March 2025 to meet its 2023 and 2024 Renewable Volume Obligations (RVOs). These obligations are a key component of the U.S. government’s efforts to increase the use of renewable fuels and reduce greenhouse gas emissions.

The 18.7 million RINs required for retirement include a mix of different categories: 761,064 D3 cellulosic biofuel RINs, 4.22 million D4 biomass-based diesel RINs, 518,071 D5 advanced biofuel RINs, and 13.3 million D6 renewable fuel RINs. The total cost of these credits is estimated to be approximately $15 million. RINs are a tracking mechanism used to ensure that renewable fuel producers comply with blending mandates under the RFS program.

As part of the bankruptcy proceedings, Vertex had planned to sell the Mobile refinery, with an auction scheduled for December 11, 2024. However, the auction was postponed due to a lack of qualified bidders, and the bankruptcy case is still ongoing.