SAP CTRM-RINS-Renewable Volume Obligation (RVO)

What is RVO Calculation in SAP CTRM?

Calculation is a regulatory requirement under the Renewable Fuel Standard (RFS) 2.0 program, enforced by the U.S. Environmental Protection Agency (EPA). It determines the minimum volume of renewable fuel (ethanol, biodiesel, etc.) that obligated parties (refiners, importers, and blenders) must blend into their fuel supply.

Key Components of RVO Calculation:

1. Obligation Volume Determination – Based on the total fuel produced or imported.
2. Renewable Fuel Percentage Standards – Set annually by the EPA.
3. Credit Accounting (RINs) – RINs (Renewable Identification Numbers) are used to track compliance.

Use Case: RVO Calculation in SAP CTRM

Scenario: RVO Provisioning for Fuel Deals in SAP CTRM

Business Requirement

A petroleum company (Obligated Party) must comply with RFS 2.0 regulations by blending renewable fuel or purchasing RINs to meet its RVO requirement. The company uses SAP Commodity Trading and Risk Management (CTRM) to track and manage fuel transactions, RINs trading, and regulatory compliance.

Process Flow in SAP CTRM

Step 1: Capture Fuel Purchases & Sales Transactions

• The company purchases crude oil, gasoline, and diesel in SAP Trade Capture Management (TCM).
• Fuel transactions are linked to business partners and contracts in SAP GTM (Global Trade Management).

Step 2: Calculate RVO Requirement

• RVO is determined based on:Total fuel volume imported/produced.EPA-mandated renewable fuel blending percentage.Existing RINs banked from previous periods.
• SAP Commodity Pricing Engine (CPE) applies RFS 2.0 formulas to compute the RVO.

Step 3: Generate RVO Provision for Financial Accounting

• SAP FSCM (Financial Supply Chain Management) and TRM (Treasury & Risk Management) are used to record RVO costs as provisions in SAP FI-GL.
• The provision amount is calculated as:Total RVO Volume x Market Price per RIN.

Step 4: RINs Purchase for Compliance

• If the company cannot blend sufficient biofuel, it must purchase Standalone RINs from the market.
• The company uses SAP Trade Management & Market Risk Analyzer to buy RINs.
• SAP FSCM Credit Risk Analyzer checks exposure before purchasing RINs.

Step 5: RVO Settlement & EPA Reporting

• SAP Environmental Compliance Module tracks RVO fulfillment.
• RINs are retired in SAP Inventory Management.
• RVO Compliance Report is generated for submission to EPA.

Solution Architecture in SAP CTRM

Business Benefits of SAP CTRM for RVO Management

? Automated RVO Calculation – Eliminates manual errors and ensures compliance. ? Real-time RINs Trading & Accounting – Tracks obligations efficiently. ? Integration with EPA Compliance Systems – Provides accurate reporting. ? Optimized RINs Portfolio Management – Reduces costs by leveraging market analytics.

https://www.epa.gov/renewable-fuel-standard-program/final-renewable-fuels-standards-rule-2023-2024-and-2025