The White House is currently reviewing a plan from the EPA in response to a backlog of small refinery exemptions under the U.S. Renewable Fuel Standard. According to three sources cited by Reuters, the agency has proposed that large oil refiners cover about half, or less, of the 1.1 billion gallons of renewable fuel blending obligations recently waived for smaller players.
If enacted, this compromise would leave roughly 550 million gallons of demand unfulfilled, potentially creating an oversupply of renewable fuel credits (RINs) and thereby pressuring RIN prices downward – a scenario that could undercut both the biofuel market and agricultural feedstock demand.
This middle-ground approach, intended to balance competing interests, falls short of biofuel producers’ and farm-state lawmakers’ insistence that 100% of waived volumes be reallocated. At the same time, it reflects the oil industry’s resistance to absorbing the full cost of exemptions on top of rising blending mandates.
The flurry of activity stems from an August move by the EPA to clear more than 170 pending small refinery exemption requests dating back to 2016. While the approvals, denials, and partial waivers resolved most of the backlog, the agency now must grapple with how – or whether – to make larger refiners compensate for the lost blending demand.
That’s where the upcoming supplemental rule comes in, a ruling that is expected in the next few weeks ahead of the October 30 deadline.
This is just the latest chapter in the constant battle between Big Oil, eager to limit additional compliance burdens, and the Farm Belt and biofuel producers, fighting to defend demand for corn, soybeans, and renewable diesel. Indeed, the fate of hundreds of millions of gallons and billions in credit value may hinge on the EPA’s final decision.
The final decision will just be the latest in broader Trump-era biofuel policy shifts. In June, under new leadership, the EPA proposed dramatically increasing biofuel blending targets to 24.02 billion gallons in 2026 and 24.46 billion in 2027. It also suggested a hefty biomass-based diesel mandate (7.12 billion RINs, equivalent to about 5.61 billion gallons).
By Charles Kennedy for Oilprice.com
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