As defined by the Clean Air Act, cellulosic biofuel is “a renewable fuel derived from any cellulose, hemicellulose, or lignin that is derived
from renewable biomass and that has life cycle greenhouse gas emissions that are at least 60% less than the baseline lifecycle greenhouse gas emissions”.
Cellulosic RINs (biofuel and biodiesel) have highest RIN value, followed by biomass-based diesel, advanced biofuels and general renewable fuels, because of the
specified annual RVOs by the EPA. Annual RVOs force the obligated parties to acquire specific percentage of RINs from categories of fuel that
contribute to significant reductions in greenhouse gas (GHG) emissions, which are advanced fuels and cellulosic fuels.
All these years, EPA mandates gave higher cellulosic fuel volume requirements than the volume generated which resulted in the formulation of a
Cellulosic Weaver Credit (CWC). The CWC can be used together with advanced fuel RIN to meet the cellulosic fuel obligations of the year (D5+CWC=D3).
The CWC price is reported each year by EPA and the value is either 25c or $3-P (P= 12-month Average of whole sale prices of gasoline), whichever is greater. CWCs should be
used within the same year generated, while excess RINs can be used in the subsequent year, but only for 20% of the annual requirements. The CWC value is important, as it
also acts as a cap for D5-D3 RINs prices. Cellulosic RINs and CWC are great incentives for cellulosic fuel producers, because they can be used to determine the price of
biofuel based on the market.