EPA proposes reallocation of SRE volumes

WASHINGTON — The U.S. Environmental Protection Agency proposes to reallocate 100% of the renewable fuel volume requirements recently waived via 29 small refinery exemptions.

EPA Administrator Lee Zeldin announced revisions to the Renewable Fuel Standard “Set 2” rule volumes that proposes two options, both of which would reallocate 100% of the difference between projected and actual exempted volumes for 2025 SREs.

When EPA published the “Set 2” rule in August, the agency estimated the volume of hardship exemptions that small refineries would receive for their 2025 renewable fuel obligations.

However, those 2025 obligations exceeded EPA’s expectations, and an additional 770 million renewable identification numbers worth of renewable fuels were exempted from RFS obligations.

EPA’s ruling granted full exemptions to 18 refiners and partial exemptions to another 11, representing a total of 1.76 billion exempted RINs or renewable fuel blending credits. This represented the second-highest annual volume of SREs ever granted by EPA.

The Oct. 13 announcement advances the agency’s stated intention to reallocate 100% of this newly exempted renewable fuel volume into the 2026 and 2027 renewable volume obligations.

The agency recognizes the importance of getting stakeholder input on the best approach to do so. Therefore, EPA is seeking public comment on two proposed approaches:

• Proposed Approach 1: EPA would divide the additional 2025 SRE volume equally between the 2026 and 2027 compliance years.

• Proposed Approach 2: EPA would reallocate all the additional 2025 SRE volume to the 2027 compliance year.

EPA will take public comments on the proposal until Dec. 4.

Additionally, the proposed revision to the 2026 standards may extend the existing 2026 compliance reporting deadline of March 31.

“If finalized, this proposal will ensure that all the benefits of the ‘Set 2’ rule will be realized for American farmers,” the EPA stated.

“In each action taken, EPA works to deliver for all Americans. From our farmers to our energy workers, each has an important role to play in growing our economy and ensuring America’s energy independence,” Zeldin said.

“As soon as we got into office, American farmers asked the Trump EPA not to give them handouts, but create avenues for them to enter additional markets. As our farmers continue to harvest their crops, today’s proposal is working to maintain a strong and durable market for them to sell to.”

Pros, Cons

Groups representing oil refineries and renewable fuel had mixed reviews on the latest EPA effort.

“EPA’s proposal threatens to drive up gasoline and diesel prices for American consumers even higher than the 30 to 40 cents per gallon the RFS has been adding to prices at the pump. Past experience shows that reallocation is unnecessary to maintain biofuel blending.

“In 2018, when EPA granted small refinery exemptions without reallocating the waived volumes, ethanol blending remained constant and the blend rate even increased slightly. Reallocating those volumes now would simply add more compliance costs on top of EPA’s already unrealistic mandates for 2026 and 2027, further burdening American consumers and America’s remaining independent refiners.

“America’s farmers deserve strong markets for their crops, but they also depend on affordable diesel to plant, harvest and transport them. Agricultural groups cannot continue demanding ever-higher biofuel mandates while ignoring the higher fuel costs those same policies can impose on farmers. EPA should pursue a balanced policy that supports American agriculture without sacrificing fuel affordability, refinery jobs or domestic energy production.”

Fueling American Jobs Coalition

“ISA appreciates EPA and the White House for their commitment to America’s farmers and for proposing to restore 100% of the biofuel volumes lost through 2025 SRE actions. The administration’s strong support for domestic biofuel policies continues to provide much-needed market certainty for U.S. farmers.

“Those policies have helped spur significant investments in soybean crushing capacity and biofuel production across Illinois and the Midwest, creating new opportunities for soybean growers and strengthening rural economies.

“Overall, maintaining the renewable fuel volumes established in the 2026-2027 Renewable Volume Obligation rule remains a top priority for soybean farmers as they work to protect and expand domestic biofuel demand amid economic challenges.”

Bryan Severs, chairman

Illinois Soybean Association

“While we believe most of the exemptions were unjustified, EPA’s reallocation plan — if finalized as proposed — will help offset the demand loss for ethanol producers and farmers. We look forward to this proposal being swiftly finalized so that renewable fuel producers, refiners and our partners in agriculture have the certainty they need heading into 2027.

“With refiners enjoying record-high profit margins, gasoline supplies tightening and drivers still paying too much at the pump, the Trump administration understands this is no time to undermine domestic biofuels with SREs. The administration should be expanding access to affordable American-made ethanol — not giving the oil industry another break.”

Geoff Cooper, president and CEO

Renewable Fuels Association

“Every gallon of renewable fuel displaced by an SRE represents lost demand for American ethanol, lost value for farmers and a missed opportunity to lower fuel costs for consumers.

“The integrity of the RFS depends on ensuring the volumes established under the program translate into real-world renewable fuel demand. Farmers and ethanol producers need certainty that RFS requirements will not be eroded after the fact by exemptions.

“While this proposed reallocation is an important step, the debate over SREs has held up adoption of year-round E15. Congress must act to provide greater certainty and expand opportunities for ethanol by passing nationwide E15 legislation before the end of the year.”

Brian Jennings, CEO

American Coalition for Ethanol

“We are pleased to see that the administration has kept its pledge to protect farmers and biofuel producers while administering this critical program, and we appreciate that biofuel producers will be kept whole with the reallocation of all waived volumes.

“Biofuels provide essential energy supplies for our nation, and corn farmers are proud to contribute to our nation’s energy security. We hope that the Renewable Fuel Standard and the small refinery exemption program are managed with certainty in the years to come.”

Matt Frostic, president

National Corn Growers Association