Massive refinery exemptions would undo progress under Trump’s 2026-’27 RFS blending levels

This week biofuels markets have been thrown into chaos over rumors that U.S. EPA may grant nearly double the forecasted amount of small-refinery exemptions (SREs) from the 2025 Renewable Fuel Standard blending levels.

In March, EPA forecasted less than 1 billion gallons of exemptions for 2025, but now it has been reported the agency plans to exempt 1.8 billion gallons.

Such an action would undermine the progress made since President Donald Trump finalized record RFS blending levels in March.

“President Trump rightly garnered much praise in March by finalizing the most robust RFS blending levels in history,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association. “To reverse course now by granting massive levels of unjustified refinery exemptions would be bad policy, bad economics and bad for farmers. We are hoping this is just another false rumor floated in the media to roil the markets so some credit trader can try to make a buck. But if there is substance behind the rumors, it is not too late to change course and to commit to a robust RFS—a commitment President Trump made in March, a commitment that is working, and a commitment that EPA should not undermine.”

In March, EPA announced that it would clear a backlog of refinery-exemption requests from the previous administration covering the 2023-’25 compliance years.

The agency adopted a DOE methodology to evaluate the requests.

In order to minimize the damage to renewable fuel producers, the EPA agreed to reallocate 70 percent of the exemptions to the remaining obligated parties.

At that time, renewable fuels supporters argued for 100 percent reallocation and few, if any, refiner exemptions.

However, combined with record-breaking RFS blend levels for 2026-’27, most biofuels supporters remained generally positive.

“If a new methodology is adopted that grants nearly all refinery-exemption requests for the 2025 compliance year, that would equate to roughly 1 billion lost biofuel gallons,” Shaw said. “And the damage wouldn’t stop there. Applied to 2026-’27, it would mean nearly a billion lost gallons each year going forward as well. So-called record-breaking RFS levels don’t mean a thing if they are reversed through unjustified refinery exemptions. IRFA members urge President Trump to throw this rumor on the ash heap of history, to stand by his commitment to American farmers, and to order the EPA to deny the baseless claims of economic harm by some refiners at a time of record refinery profits.”

Since the EPA finalized the RFS blending levels for 2026-’27 in March, there has been a strong resurgence of biodiesel production in Iowa and around the country, with record production during the past few months.

The strong RFS rule that Trump finalized was having an undeniably positive impact.

“Since President Trump put the RFS back on track in March, it has been doing exactly what it was supposed to—driving demand for biofuels,” Shaw said. “Both biodiesel and ethanol demand hit records this year. In Iowa, we had biodiesel plants that were shuttered or running at very reduced rates. Today they are producing at full capacity, buying soybean oil from our farmers, and hiring back workers that had been let go. It would be reckless and almost unimaginable to pull the rug out from under this success story at the request of a handful of oil refiners that are certainly not suffering from economic hardship during this time of high oil and fuel prices.”