The US Environmental Protection Agency (EPA) has proposed requiring larger refiners to absorb all biofuel blending obligations waived for small refineries, in a move aimed at preserving demand for ethanol and biodiesel despite record exemption volumes granted earlier this year.
The proposal follows the EPA's August decision to grant renewable fuel standard (RFS) exemptions to 29 small refineries for the 2025 compliance year, including full exemptions for 18 facilities and partial waivers for 11 others. The agency said the exemptions represented approximately 1.76 billion Renewable Identification Numbers (RINs), the largest volume of small refinery relief issued under the programme.
Under the new proposal, the EPA would reallocate 100% of the waived blending obligations to larger refiners. The agency is considering two options: spreading the additional volume evenly across the 2026 and 2027 compliance years or allocating the entire volume to 2027. Public comments are being accepted until 4 December.
EPA Administrator Lee Zeldin said the measure is intended to maintain strong markets for US farmers and biofuel producers while supporting energy security and economic competitiveness. Brooke Rollins, US Secretary of Agriculture, welcomed the proposal, saying it would help sustain market opportunities for agricultural producers and the biofuels sector.
The plan has been broadly welcomed by the biofuels industry after concerns that the exemptions would reduce demand for ethanol and biodiesel feedstocks. Geoff Cooper, chief executive of the Renewable Fuels Association, said the reallocation proposal would help offset lost demand resulting from the exemptions, although he maintained that many of the waivers were unwarranted.
Renewable credit prices for biodiesel and ethanol edged lower following the announcement, according to market participants attending the OPIS biofuels conference in Chicago. The EPA also indicated that implementation of the revised obligations could require an extension to the current 2026 compliance deadline of 31 March 2027.
EPA proposes full reallocation of refinery biofuel exemptions
