US EPA Proposes Full Reallocation of Refinery Biofuel Exemptions

• 𝘛𝘩𝘦 𝘜𝘚 𝘌𝘗𝘈 𝘱𝘳𝘰𝘱𝘰𝘴𝘦𝘴 𝘳𝘦𝘢𝘭𝘭𝘰𝘤𝘢𝘵𝘪𝘯𝘨 100% 𝘰𝘧 𝘸𝘢𝘪𝘷𝘦𝘥 𝘣𝘪𝘰𝘧𝘶𝘦𝘭 𝘰𝘣𝘭𝘪𝘨𝘢𝘵𝘪𝘰𝘯𝘴 𝘵𝘰 𝘭𝘢𝘳𝘨𝘦𝘳 𝘳𝘦𝘧𝘪𝘯𝘦𝘳𝘴 𝘰𝘷𝘦𝘳 𝘧𝘶𝘵𝘶𝘳𝘦 𝘤𝘰𝘮𝘱𝘭𝘪𝘢𝘯𝘤𝘦 𝘺𝘦𝘢𝘳𝘴. • 𝘛𝘩𝘦 𝘱𝘳𝘰𝘱𝘰𝘴𝘢𝘭 𝘧𝘰𝘭𝘭𝘰𝘸𝘴 𝘦𝘹𝘦𝘮𝘱𝘵𝘪𝘰𝘯𝘴 𝘤𝘰𝘷𝘦𝘳𝘪𝘯𝘨 1.76 𝘣𝘪𝘭𝘭𝘪𝘰𝘯 𝘙𝘦𝘯𝘦𝘸𝘢𝘣𝘭𝘦 𝘐𝘥𝘦𝘯𝘵𝘪𝘧𝘪𝘤𝘢𝘵𝘪𝘰𝘯 𝘕𝘶𝘮𝘣𝘦𝘳𝘴 𝘧𝘰𝘳 𝘵𝘩𝘦 2025 𝘤𝘰𝘮𝘱𝘭𝘪𝘢𝘯𝘤𝘦 𝘺𝘦𝘢𝘳. • 𝘛𝘸𝘰 𝘰𝘱𝘵𝘪𝘰𝘯𝘴 𝘸𝘰𝘶𝘭𝘥 𝘥𝘪𝘴𝘵𝘳𝘪𝘣𝘶𝘵𝘦 𝘢𝘥𝘥𝘪𝘵𝘪𝘰𝘯𝘢𝘭 𝘣𝘭𝘦𝘯𝘥𝘪𝘯𝘨 𝘰𝘣𝘭𝘪𝘨𝘢𝘵𝘪𝘰𝘯𝘴 𝘢𝘤𝘳𝘰𝘴𝘴 𝘵𝘩𝘦 2026 𝘢𝘯𝘥 2027 𝘤𝘰𝘮𝘱𝘭𝘪𝘢𝘯𝘤𝘦 𝘺𝘦𝘢𝘳𝘴. • 𝘉𝘪𝘰𝘧𝘶𝘦𝘭 𝘱𝘳𝘰𝘥𝘶𝘤𝘦𝘳𝘴 𝘢𝘯𝘥 𝘧𝘢𝘳𝘮 𝘨𝘳𝘰𝘶𝘱𝘴 𝘴𝘢𝘺 𝘳𝘦𝘢𝘭𝘭𝘰𝘤𝘢𝘵𝘪𝘰𝘯 𝘤𝘰𝘶𝘭𝘥 𝘩𝘦𝘭𝘱 𝘰𝘧𝘧𝘴𝘦𝘵 𝘭𝘰𝘴𝘵 𝘥𝘦𝘮𝘢𝘯𝘥 𝘧𝘰𝘳 𝘦𝘵𝘩𝘢𝘯𝘰𝘭 𝘢𝘯𝘥 𝘣𝘪𝘰𝘥𝘪𝘦𝘴𝘦𝘭. • 𝘗𝘶𝘣𝘭𝘪𝘤 𝘤𝘰𝘮𝘮𝘦𝘯𝘵𝘴 𝘢𝘳𝘦 𝘥𝘶𝘦 𝘋𝘦𝘤𝘦𝘮𝘣𝘦𝘳 4, 2026, 𝘢𝘯𝘥 𝘵𝘩𝘦 𝘱𝘳𝘰𝘱𝘰𝘴𝘢𝘭 𝘤𝘰𝘶𝘭𝘥 𝘢𝘧𝘧𝘦𝘤𝘵 𝘤𝘰𝘮𝘱𝘭𝘪𝘢𝘯𝘤𝘦 𝘥𝘦𝘢𝘥𝘭𝘪𝘯𝘦𝘴.

The US Environmental Protection Agency (EPA) has proposed requiring larger oil refineries to make up for 100% of the biofuel blending obligations waived for smaller facilities, aiming to preserve demand for renewable fuels. The proposal follows the agency’s August decision to grant exemptions to 29 small refineries that argued compliance with federal requirements would cause economic hardship.

Under the Renewable Fuel Standard (RFS), refiners must meet obligations to blend renewable fuels into transportation fuel or comply through other permitted mechanisms.

In August, the EPA granted exemptions worth 1.76 billion Renewable Identification Numbers (RINs) for the 2025 compliance year, including full waivers for 18 refineries and partial exemptions for 11 others.

The decision, the largest set of small refinery exemptions ever issued under the programme, prompted criticism from biofuel producers and agricultural groups concerned about reduced demand for ethanol, biodiesel and crop-based feedstocks.

The EPA is seeking public comment on two approaches for reallocating the waived volumes. One would divide the additional obligations associated with the 2025 exemptions evenly between the 2026 and 2027 compliance years. The other would assign the entire amount to 2027. Comments are due by December 4, 2026. The agency has also indicated that reallocating the obligations could require extending the March 31, 2027 deadline for completing 2026 compliance.

The proposal has drawn support from ethanol industry representatives, who believe reallocating the obligations could help offset the demand lost through the exemptions. Refiners, meanwhile, have argued that high compliance costs and elevated RIN prices justify relief for facilities facing financial difficulties. Following the announcement, renewable credit prices for biodiesel and ethanol edged down, according to a refinery trader cited at the OPIS biofuels conference in Chicago.

The final decision could influence renewable fuel demand, compliance costs and agricultural feedstock markets. Cognitud can help organisations in the fuel and agricultural supply chains assess regulatory changes, evaluate exposure to shifting renewable fuel requirements and identify potential procurement and cost risks. Scenario analysis can also help businesses prepare for different compliance outcomes and make more informed operational and sourcing decisions.