The U.S. Environmental Protection Agency (EPA) finalized 2026-2027 Renewable Fuel Standard (RFS) volumes on March 27, setting biofuel volumes higher than proposed numbers released last year.
EPA set overall volumes to include reallocation of small-refinery exemptions (SRE) at 26.81 billion gallons for 2026 and 27.02 billion gallons for 2027—providing a 70% reallocation. Corn-based ethanol also maintains a 15-billion-gallon market in the final rule.
The agency had been considering a range of SRE reallocations from zero to 100%, with biofuels and agriculture industries pushing for full reallocation.
“This approach will balance a number of factors that come into play when considering volume requirements and the impacts of SREs, including protecting biofuel demand while maintaining a stable and functioning credit market,” the EPA said in a news release.
Biomass-based diesel volumes for 2026 were set at 9.07 billion gallons and jump to 9.2 billion gallons in 2027. The advanced biofuels volumes were set at 11.1 billion gallons and 11.32 billion gallons for those years.
The new volumes represent a 60% increase over 2025 for both biodiesel and renewable diesel, according to EPA.
EPA also announced, starting in 2028, foreign fuels and feedstocks will receive half the RFS compliance value compared to American-made products, “providing American biofuel producers with time to prepare for the change while ensuring that American farmers benefit from the RFS program and American energy independence,” the agency said.
Geoff Cooper, president and CEO of the Renewable Fuels Association, said the final RFS numbers represent a “robust” boost for fuel consumers and farmers.
“The final rule locks in the highest-ever renewable fuel volume obligations and provides clarity for farmers, ethanol producers, oil refiners, and fuel distributors alike,” Cooper said.
The EPA estimated the Set 2 RFS rule would generate over $10 billion for rural economies and create over 100,000 new jobs in the agricultural and manufacturing sectors.
Brian Jennings, CEO of the American Coalition for Ethanol, said EPA’s decision to set RFS volumes at their highest level ever helps “fulfill” Congress’s original intent of the law.
“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 do not erode demand for renewable fuels,” Jennings said in a statement.
In 2025, biodiesel and renewable diesel facilities were forced to shut down or run far below prior-year production levels because of market uncertainty. As a result, U.S. biodiesel production declined by one-third in 2025 compared to 2024. — Todd Neeley, DTN environmental editor
