EPA’s proposed 2026-’27 RFS volumes for biobased diesel exceed industry expectations

The U.S. EPA issued its highly anticipated proposal June 13 for renewable volume obligations (RVOs) under the Renewable Fuel Standard for 2026 and 2027, including several important changes to the program.

Unlike previous proposals, which put forth biobased diesel (BBD) RVOs in gallons while others like ethanol and advanced biofuels were issued in renewable identification number (RIN) credits, EPA is now issuing all RVOs in RIN equivalents.

For 2026 and 2027, EPA is proposing to set the BBD RVO at 7.12 billion RINs and 7.50 billion RINs, respectively.

One RIN is equivalent to one ethanol-equivalent gallon of renewable fuel.

The agency projects the volume equivalent of its RIN-based BBD RVO to be approximately 5.61 billion gallons for 2026 and 5.86 billion gallons for 2027, up from 3.35 billion gallons for 2025 set by the previous administration.

“There are lots of details and questions about the calculation of those volumes,” Paul Winters, Clean Fuels Alliance America’s director of public affairs and federal communications, told Biobased Diesel Daily®.

For total advanced biofuels under the RFS program, EPA is proposing 9.02 billion ethanol-equivalent gallons for 2026 and 9.46 billion ethanol-equivalent gallons for 2027. This is up from 7.33 billion ethanol-equivalent gallons in 2025 set by the previous administration.

Source: U.S. EPA

“In general, the percentage RVOs are a robust change from 2025—an entire 1 percent jump,” Winters said.

For 2025, the BBD RVO percentage is 3.15 and for advanced biofuels it is 4.31. For 2026, however, the BBD RVO percentage is proposed at 4.24 while the advanced biofuels RVO percentage is proposed at 5.37.

EPA noted that its volume estimates account for the projected impacts of the proposed RIN reduction for imported renewable fuel and renewable fuel produced from foreign feedstocks, as well as the proposed revised equivalence value for renewable diesel.

The agency is proposing to modify the value of a RIN based on whether the biofuel is derived from domestic or foreign sources. Specifically, EPA is proposing to amend RFS regulations so that foreign biofuels and feedstocks would only generate 50 percent of the RIN value relative to domestic biofuels and feedstocks.

“By reducing the value of the RIN for foreign biofuels and feedstocks, it will decrease America’s reliance on imports, promote U.S. production, strengthen support for rural agricultural sectors, and increase American energy security,” EPA stated, adding that the agency is proposing this change in light of the significant growth in imports the program has seen in recent years.

Furthermore, EPA noted that it is reducing equivalent values of domestic renewable diesel, renewable naphtha and sustainable aviation fuel (SAF) “to properly account for the fossil-derived hydrogen” found in hydrotreated biofuels, noting that biodiesel RIN values had long been lower due to its fossil-derived methanol content.

“Specifically, we are proposing to reduce the equivalence value for renewable diesel specified in 40 CFR 80.1415(b) to 1.6,” EPA stated. “We are also proposing to specify equivalence values of 1.4 for renewable naphtha and 1.6 for renewable jet fuel. Equivalence values for these fuels are not currently specified in 40 CFR 80.1415(b), but are instead determined on a facility-by-facility basis using an equation specified in 40 CFR 80.1415(c). Previously approved equivalence values for naphtha range from 1.4 to 1.5 with the majority approved at 1.5, and for renewable jet fuel range from 1.6 to 1.7, with the majority approved at 1.6.”

EPA now projects the average number of RINs generated for BBD will be 1.27 and 1.28 RINs per gallon in 2026 and 2027, respectively, but the agency added that these numbers are not proposed standards and are presented for illustrative purposes only.

Winters told Biobased Diesel Daily® that all of these changes and interpreting how this proposal will ultimately be viewed in terms of positive impact to the BBD sector “will take careful consideration of the math.”

On face value, EPA’s BBD volume projections for 2026 and 2027 exceed industry expectations, which, over the nearly 20-year life of the program since RFS2 was signed into law in 2007, is not commonplace. The projected volume proposal for 2026 is 7 percent higher than the 5.25 billion gallons industry trade groups like Clean Fuels Alliance America and even the American Petroleum Institute were seeking. For 2027, Clean Fuels was pushing EPA to set BBD volumes at 5.75 billion gallons, a figure another trade group—the Advanced Biofuels Association—sought for 2026. EPA’s proposed BBD volumes for 2027, however, surpassed Clean Fuels’ expectations by 2 percent.

“Under our Set 2 proposal, [BBD] is the category of renewable fuel projected to experience the most significant growth in 2026 and 2027,” the agency stated. “EPA’s projections in this area are consistent with the significant growth in the supply of these fuels, particularly renewable diesel, observed in recent years.”

In determining the proposed volume, EPA considered many factors, including production capacity, the availability of qualifying feedstocks, historical trends, costs, and several others.

“We placed special emphasis on projecting available qualifying feedstocks, as we determined this factor was most likely to limit BBD production in future years,” the agency stated. “In this proposed rule we project that all of the growth in the supply of BBD in 2026 and 2027 would come from domestic renewable fuel production from domestic feedstocks (mostly domestic soybean oil). We also project that imported biofuels and feedstock will continue to be supplied to the market, but that over time these fuels will represent a decreasing share of the BBD supply.”

Michael McAdams, president of the Advanced Biofuels Association, said in a statement that he applauded EPA for aligning volume targets with actual feedstock availability. “The EPA’s initial proposal correctly recognizes that global feedstock supply and U.S. production capacity are more than sufficient to support a robust RVO, including at least 7.12 billion RINs of BBD in 2026 (5.61 billion gallons) and 7.50 (5.86 billion gallons) in 2027,” he said. “Strong RVOs are essential to diversifying the nation’s fuel supply, supporting rural economic development, lowering costs for consumers and businesses, and reinforcing America’s competitive edge in energy innovation. This proposal makes clear that the EPA understands the critical role advanced biofuels can play in their broader energy dominance strategy, and our industry is elated at this development.”

As complex as the proposed changes to the RFS program appear to be, these RVO proposals for BBD are indeed a welcomed and needed shot in the arm for a languishing industry that has been reeling from years of low volumes set by the previous administration, as well as policy uncertainty over the transition from the blenders tax credit to a production tax credit known as section 45Z, for which guidance has been limited and implementing regulations not yet issued—let alone proposed.

Industry reaction

“If approved, these volumes would exceed market expectations as evidenced by soybean oil jumping limit up today,” Pete Moss, the president of Frazier, Barnes & Associates, told Biobased Diesel Daily®. “It would be very positive for the soybean-processing industry, and possibly the biodiesel and renewable diesel industries, depending on other factors such as 45Z and small-refinery exemptions (SREs).”

Clean Fuels called the proposal “a robust step-change” in terms of BBD RVOs and obligation percentages.

“Clean Fuels welcomes the opportunity to carefully evaluate the proposed program changes, which include setting BBD volumes in RIN equivalence,” the organization stated. “EPA’s proposal makes a much-needed step-change in BBD volumes for both 2026 and 2027. At the same time, EPA proposes to change the RIN-generation values of imported fuel and U.S. fuel made from imported feedstock. Clean Fuels looks forward to carefully evaluating this proposal and its potential impacts on the market.”

Kurt Kovarik, Clean Fuels’ vice president of federal affairs, stated, “Today’s RFS proposal is a welcome and timely signal to U.S. biodiesel, renewable diesel and SAF producers as well as America’s farmers and agricultural businesses. The industry has made major investments in domestic production capacity and feedstocks to meet America’s energy needs and provide consumers affordable, cleaner fuels. We anticipate this will have a tremendous beneficial impact for American farmers and agricultural communities and we look forward to working with President Trump and EPA Administrator Zeldin to finalize this rule and fully unleash U.S. clean fuel producers.”

He noted that the BBD industry supplied more than 5 billion gallons of biodiesel, renewable diesel and SAF to the U.S. market in 2024 and is poised to deliver more in 2026.

“The U.S. BBD industry supports 107,400 jobs and generates $42.4 billion in economic activity,” he said, highlighting figures from a recent study commissioned by Clean Fuels. “Continued market growth and stability through the RFS will enable more economic opportunities, create more jobs and revitalize America’s agricultural sector.”

Clean Fuels explained that the rule does not include a specific estimate of gasoline and diesel gallons produced by small refineries that will be exempted from the program in 2026 and 2027, though it proposes a range.

“Including an estimate in the RVO formula will ensure that the BBD volumes set by EPA in this rule are not unintentionally reduced by future SREs,” the association stated.

“We appreciate Administrator Zeldin’s commitment to find effective solutions to the remaining backlog of SREs,” Kovarik said. “We look forward to working with him to ensure that those solutions do not erode the U.S. market for BBD and harm American farmers and consumers.”

The Iowa Biodiesel Board said the record-setting BBD targets are “a major win” for domestic biodiesel producers.

“While this proposal has some significant program changes that will require further study for us to better understand, overall it reflects the strength, resilience and growth potential of America’s biodiesel industry,” said Grant Kimberley, IBB’s executive director. “The volumes signal real opportunity for domestic producers, especially here in Iowa, and we appreciate the EPA’s recognition of what this industry is capable of delivering. We thank the Trump administration for recognizing that American-made biofuels should be a national priority, and for setting the stage for today’s historic growth in BBD. For Iowa, these volumes likely mean something even more immediate—getting our idled biodiesel plants back up and running. That’s good news for jobs, for soybean farmers and for communities that rely on biofuels as a driver of economic growth.”

The American Soybean Association called the proposed BBD-volume increases “historic” and noted the 67 percent increase from 2025 to 2026.

“For years, ASA and others in the domestic biofuel value chain argued that the previous RVOs missed the mark and did not account for the feedstock availability nor production capacity,” ASA stated. “If finalized, this proposal would jumpstart a biofuel industry that has largely been crippled by weak RIN-credit values. Additionally, EPA proposed a new concept to discount the RIN-credit value for foreign finished fuel and fuels produced using foreign feedstocks. As soybean farmers struggle to maintain biofuel feedstock market share amid the rapidly growing flood of cheap, foreign feedstocks like used cooking oil, this proposal would once again give U.S. agriculture a competitive edge in the biofuel value chain.”

The U.S. biodiesel industry got its start in Missouri more than 30 years ago, and Missouri Soybean Association President Renee Fordyce said, “This long-overdue proposal is a strong signal that American-grown fuels have a permanent place in our nation’s energy future.” Fordyce added that the increased BBD volume targets provide much-needed market certainty for farmers, processors and biofuel producers, allowing for long-term planning and investment.

“Soy-based biofuels are a proven economic driver in Missouri,” Fordyce said. “They add up to 13 percent to the value of each bushel and offer a domestic market that helps farmers weather global-trade uncertainty. This proposal puts us back on a path of smart, strategic growth.”

Like IBB, the Biodiesel Coalition of Missouri called the proposed BBD RVOs “a major win” for Missouri biodiesel producers, fuel marketers, retailers and fleets. The organization noted that Missouri is a national leader in biodiesel production and home to one of the largest biodiesel user fleets in the country.

“This proposal from EPA is a strong statement about the role of Missouri-made biodiesel in our nation’s energy future,” said BCM Chairman James Greer. “This proposal will help biodiesel producers continue to operate at full capacity while supporting the retailers and fleets that have made investments to utilize and promote biodiesel.”

BCM added that following a challenging start to 2025, the proposed volume targets offer a strong market signal to biodiesel producers, and to the fuel marketers and retailers committed to offering biodiesel.

“We commend EPA for proposing a robust RVO in the BBD category,” stated the Sustainable Advanced Biofuel Refiners Coalition. “We also believe that the preference for domestic feedstocks and fuels is a positive change that will help strengthen the U.S. biodiesel industry and U.S. farmers at a time when both groups are struggling with severe uncertainties. We are continuing to review the finer elements of the proposal, and we hope that EPA ultimately handles the SRE requests in a way that will not significantly diminish these proposed RVOs.”

Additional changes to RFS proposed

Additional changes to the RFS program proposed June 13 include:

• Updating RIN generation and assignment provisions.

• Clarifying that RINs cannot be generated on pure or neat biodiesel that is used as process heat or for power generation.

• Updating existing renewable fuel pathways and adding new ones.

• Adding a joint and several liability provision applicable to importers of renewable fuel.

• Revising compliance reporting and registration provisions, including clarifying that small refineries that receive an exemption from their RFS obligations must still submit an annual compliance report.

• Clarifying certain testing requirements for biodiesel and renewable diesel.

On RINs from electricity, EPA stated, “Since e-RINs should never have been part of the RFS program, EPA is also proposing to remove the definition of ‘renewable electricity’ from our regulations along with the regulations associated with generating RINs for renewable electricity. In doing so we are refocusing the program on its core statutory goals regarding liquid fuels.”

Regarding pure or neat biodiesel used for process heat or power generation, the agency stated, “The Clean Air Act and RFS regulations prohibit RIN generation for fuel that does not replace or reduce the quantity of fossil fuel present in a transportation fuel, heating oil or jet fuel. Pure biodiesel (i.e., B100) or neat biodiesel (i.e., B99) used for process heat or power generation is not a transportation fuel or jet fuel and does not qualify as heating oil under paragraph (1) of the definition of heating oil under 40 CFR 80.2 because: (1) It is not commonly or commercially known as heating oil, and (2) It is not sold for use in furnaces, boilers, or similar applications. As to the first criterion, pure or neat biodiesel is not commonly known as heating oil and has several natural qualities that make it problematic as a heating oil, the primary issue being that biodiesel gels at low temperatures and could negatively impact the equipment being fueled by biodiesel (e.g., by clogging filters). As to the second criterion, pure or neat biodiesel is not typically sold for use in furnaces, boilers or similar applications. Therefore, biodiesel producers that use some of the biodiesel they produce for process heat or that sell biodiesel to power plants cannot generate RINs on the volumes used for process heat or power generation. As such, we are proposing to clarify that RINs cannot be generated for pure or neat biodiesel that is used for process heat or power generation by revising the definition of heating oil under 40 CFR 80.2 to state that ‘pure biodiesel (i.e., B100) or neat biodiesel (i.e., B99) that is used for process heat or power generation is not heating oil.’ We request comment on the proposed clarification that RINs cannot be generated for pure or neat biodiesel used for process heat or power generation.”

EPA proposes setting the total RFS blending level at 24.02 billion gallons, a record amount.

The agency proposes to keep the corn-ethanol volume at 15 billion gallons.

EPA plans to hold virtual public hearings July 8-9.

Comments to the proposal must be received by the agency on or before Aug. 8.

To access the complete proposal, click here.