EPA Adopts New RFS, Leaves Out Renewable Power

The United States Environmental Protection Agency (EPA) has finalized Renewable Fuel Standards (RFS) for 2026 and 2027, saying the “Set 2” rule represents the highest volume requirements in program history.

As in Set 1 (2023-25), adopted under the Biden administration, renewable electricity does not qualify as renewable fuel. The Biden EPA had planned to include biogas power used in electric vehicles (EVs) but backed out following opposition from stakeholders.

“The Trump EPA has removed ‘renewable electricity’ from the RFS program; once again taking action to end the efforts to push EVs onto the American people”, the EPA said in an online statement.

The EPA instead advertised the new rule, which requires a total of 26.81 billion ethanol-equivalent barrels of renewable fuel for 2026 and 27.02 billion ethanol-equivalent barrels for 2027, as a win for U.S. farmers.

The total required volumes for advanced biofuels are 11.1 billion ethanol-equivalent gallons, which represent 11.1 billion RINs, for 2026 and 11.32 billion RINs for 2027.

Requirements for biomass-based diesel are 9.07 billion RINs for 2026 and 9.2 billion RINs for 2027.

Cellulosic biofuel volumes should be at least 1.36 billion RINs for 2026 and 1.43 billion RINs for 2027.

To meet the volumes, producers and importers of gasoline and diesel must have at least 15.5 percent of renewable fuel in their total volumes for 2026 and 15.78 percent for 2027, according to the rule published online by the EPA.

Obligated entities must have 6.42 percent of advanced biofuels in their mix for 2026 and 6.61 percent for 2027; 5.24 percent of biomass-based diesel for 2026 and 5.37 percent for 2027; and 0.79 percent of cellulosic biofuels for 2026 and 0.84 percent for 2027.

The 2026-27 requirements include a 70 percent reallocation of volume obligations from which small refineries were relieved in 2023-25.

“This approach will balance a number of factors that come into play when considering volume requirements and the impacts of SREs [small refinery exemptions], including protecting biofuel demand while maintaining a stable and functioning credit market”, the EPA statement said.

“To meet the historic 2026 and 2027 volume levels, EPA estimates that biodiesel and renewable diesel production and use will need to increase by over 60 percent compared to 2025 volumes, the last year of the Biden-Harris administration’s Set 1”, the EPA said. “This in particular will drive renewed demand for American soybean producers.

“With the benefits Set 2 will bring to America’s farmers, EPA estimates that the rule will generate over $10 billion for rural economies and create over 100,000 new jobs in the agricultural and manufacturing sectors.

“To provide continued certainty for American corn growers and ethanol producers, EPA will maintain the 15 billion conventional biofuel level for 2026 and 2027”.

According to the EPA, Set 2 could reduce U.S. oil imports by about 300,000 barrels per day over 2026 and 2027.

From 2028 fuels and feedstocks from overseas would receive half the RFS compliance value compared to domestically produced volumes, the EPA said.

Industry reaction to the new rule has been mixed, mainly taking issue with the retrospective adoption of SREs.

Will Hupman, downstream policy vice president at oil and gas lobby group the American Petroleum Institute (API), said in an online statement. “API appreciates EPA’s efforts to provide clarity on Renewable Fuel Standard volumes for 2026 and 2027 and supports obligations that reflect current market conditions”.

“However, reallocating volumes from small refinery exemptions distorts the marketplace, rewarding exempted refineries while disadvantaging the majority of refiners who are not exempted. This highlights the need for legislative reform to ensure the RFS delivers certainty, supports investment and maintains a reliable fuel supply”.

American Coalition for Ethanol chief executive Brian Jennings said in a separate statement, “Congress intended year-to-year renewable fuel blending to increase under the RFS and today’s announcement with the highest-ever volume obligations helps fulfill their intention. We’ve consistently advocated for strong final blending obligations for 2026 and 2027 reflecting the full potential of the RFS and ensuring small refinery exemptions (SREs) do not erode demand for renewable fuels”.

“It is critical that EPA set blending requirements at levels that fully account for any SREs granted”, Jennings said. “Failing to do so risks undermining the intent of the RFS by allowing obligated parties to rely on surplus Renewable Identification Numbers (RINs) rather than driving actual blending and use of renewable fuels.

“The integrity of the RFS depends on ensuring volume obligations translate into real-world demand. Any gap between required volumes and actual blending undermines the program and creates uncertainty for ethanol producers, farmers and rural communities”.

American Biogas Council (ABC) executive director Patrick Serfass criticized the exclusion of biogas power. “The delay in issuing this rule has already slowed project development, raised financing costs and stalled rural investment at a time when demand for domestic energy is rising”, Serfass said in a statement on ABC’s website.

“Adding to the disappointment, in this final rule, EPA failed to reallocate credits from waivers to the D3 RIN targets (which further diminishes the fuel targets) and has taken steps backwards on biogas-to-electricity eligibility”.

“The Set 3 rulemaking is around the corner, and it’s EPA’s opportunity to correct course”, Serfass urged. “The agency should set D3 volumes that reflect actual production, support continued growth and fully unlock biogas as a reliable source of American-made energy, fertilizer and income for farmers, rural communities and any sector with organic waste available to be recycled”.

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