On Monday, the Environmental Protection Agency announced its decision on 34 petitions from small refineries seeking exemptions (SREs) from compliance with the 2025 Renewable Fuels Standard (RFS) obligations.
The agency approved 100% exemptions for 18 refiners and 50% exemptions for 11, retiring a total of 1.76 billion RINs from 2025 compliance. At the same time, EPA announced its intention to finalize a supplemental rule to restore 2026 and 2027 volumes.
SREs Double Expectations
In the 2026-2027 RFS rule announced in March, EPA estimated that it would grant SREs totaling 990 million RINs for 2025. So, the 1.76 billion RINs for 2025 are nearly double that amount.
To provide an offset EPA promised to restore all 770 million RINs exempted above the prior estimate. EPA also announced its intention to finalize a supplemental rule before the end of October to ensure that the RINs exempted are restored to 2026 and 2027 RFS volumes.
The agency established supplemental volumes for 2026 and 2027 to ensure that the exemptions would not undercut current biodiesel and renewable diesel production and halt investments in additional production capacity.
RFA Reaction Mixed
Geoff Cooper, president and CEO of the Renewable Fuels Association, said this action could have been avoided, adding that the decision and its aftermath create instability in markets already responding to federal renewable volume obligations.
“EPA put out, as you know, the highest ever RVOS’s back in March. They should have just stepped out of the way and let the market react. The market was reacting. We’re ramping up production, ramping up RIN generation, responding to that signal, and now we got this monkey wrench being thrown into the works. So, it’s very frustrating and and just creates more chaos.”
Cooper said while RFA continues to believe most of the SREs issued are completely unjustified, they were somewhat encouraged that EPA is taking steps to minimize the damage through reallocation. He added that EPA’s proposed plan creates a pathway for ensuring no net loss in renewable fuel demand, and it is crucially important that the agency moves quickly to faithfully implement this approach.
He added that the move does set a dangerous precedent. “What happens when when refiners are prepared, are getting ready to to demonstrate compliance with 2027? They’re going to be asking for dozens of SREs again and we’re going to be right back in this soup again where EPA is required to make decisions on those on those exemption petitions. And if they decide to grant more than they originally projected, we’re just going to see this continue to play out year after year.”
The uncertainty negatively impacts RIN and agricultural markets, lowers blending volumes, and stifles renewable fuels production expansion.
At the same time, the agency finalized a rule to further delay the 2025 RFS compliance date to October 1 and provide additional benefits to all refiners.
Clean Fuels Expresses Disappointment
Kurt Kovarik, Clean Fuels’ Vice President of Federal Affairs, stated in reaction: “America’s biodiesel, renewable diesel and SAF producers have been working overtime to meet the historic RFS volumes announced just last March. The industry is producing at record pace today, providing a strong domestic market for America’s farmers, investing billions in rural communities, contributing to America’s energy security, and providing American consumers a price break at the pump – in short, delivering measurable results on the administration’s goals for the RFS. We’re hopeful that today’s action won’t reverse the progress we’ve made and that our industry can maintain faith in the RFS program.
“Clean Fuels fundamentally disagrees that small refiners need reprieve from the tepid 2025 RFS volumes set by the prior administration. We appreciate the White House’s commitment to hold biofuel producers harmless and will work with EPA to quickly finalize the promised supplemental rule. We will continue to press the administration to reallocate future small refinery exemptions to ensure they do not harm farmers and other stakeholders in clean fuel production.
American Soybean Association Welcomed EPA Decision
The American Soybean Association, welcomed EPA’s decision in a news release, but urged policymakers to move quickly.
Last week ASA warned that exemptions of 1.8 billion RINs would eliminate around 500 million gallons of biomass-based diesel demand and cost U.S. soybean farmers around $1 billion in lost revenue.
Dave Walton, ASA vice president and an Iowa soybean farmer said, “We appreciate the administration’s commitment to reallocating 100% of these additional exemptions and their intention to enter into supplemental rulemaking soon, but timing is critical. Any delay in reallocation risks undermining the domestic market demand that soybean farmers urgently need as we enter harvest season. EPA must move quickly to fully reallocate these RINs and ensure soybean farmers are held harmless.”
