The EPA has finally submitted its proposed rules for the renewable fuel standard. As we wait to see what the future holds, we review the changes that were proposed months ago, and what they mean to the liquid fuels industry.
For months, the liquid fuels industry has been waiting for the Environmental Protection Agency to finally submit the Renewable Fuel Standard (RFS) proposed biofuel blending quotas for 2026. These numbers were teased last June when the EPA released its Proposed RFS “Set 2” Rule. In September 2025, modifications to the Small Retailer Exemptions (SRE) were released with increases to the total renewable volume obligations (RVO), and the final rule was pushed back to “early 2026.” In late February 2026, the EPA announced that the RFS “Set 2” final rule was sent to the Office of Management and Budget (OMB). After OMB review, it will be sent to the White House to be signed into law.
The final document had not yet been released to the public as this issue was going to print. There were several rumored changes from the earlier versions. Two significant changes: increases in the required volumes to make up for SREs, and an amendment to the RFS regulations so that foreign biofuels and feedstocks would only generate 50 percent of the RIN value relative to domestic biofuels and feedstocks, was no longer included in the final rule.
“We are pleased EPA sent the Renewable Fuels Standard (RFS) volume standards to the OMB for review and that the agency indicated the volumes will be finalized at the end of March. We will continue to support these volume increases as the rules moves through the final review process. EPA’s proposed increase in Renewable Volume Obligations under the Renewable Fuel Standard’s Set 2 rule is good news for NEFI members because it strengthens the supply and demand fundamentals for biodiesel and renewable diesel—the renewable liquid fuels our members rely on to serve the heating market. Stronger RVOs send a clear, long-term market signal that encourages production, infrastructure investment, and supply chain development, all of which are critical to maintaining reliable fuel availability,” said Anne Steckel, NEFI Senior Advisor.
Wherever the final rule lands, it will affect the cost and availability of liquid heating fuels.
What Are RINS?
The Renewable Fuel Standard determines the Renewable Volume Obligation (RVO) – the volume of renewable fuels that need to be blended into transportation fuels. RINs are the credits used to prove RFS compliance by the obligated parties – producers, refiners, and importers.
A RIN is attached to each gallon of renewable fuel. There are four main categories based on specific lifecycle GHG reduction thresholds.
- Advanced Biofuel (D-code 5)
- Can be made from any type of renewable biomass except corn starch ethanol.
- Must reduce lifecycle greenhouse gas emissions by at least 50 percent; compared to the petroleum baseline.
- Biomass-based Diesel (D-Code 4)
- Examples include biodiesel and renewable diesel.
- Must reduce lifecycle greenhouse gas emissions by at least 50 percent; compared to the diesel baseline.
- Cellulosic Biofuel (D-Code 3 or D-Code 7)
- Renewable fuel produced from cellulose, hemicellulose, or lignin.
- To be eligible for D-Code 7 RINs the fuel must be cellulosic diesel.
- Must reduce lifecycle greenhouse gas emissions by at least 60 percent; compared to the petroleum baseline.
- Renewable Fuel (D-Code 6)
- - Includes ethanol derived from corn starch, or any other qualifying renewable fuel.
- - Fuel produced in new facilities or new capacity expansions (commenced constructed after December 19, 2007) must reduce lifecycle greenhouse gas emissions by at least 20 percent; compared to the average 2005 petroleum baseline.
Ethanol (D6) has a base value of 1 RIN per gallon, and biodiesels fall under D4 (biomass-based diesel). A gallon of ethanol generates 1.0 RINs, a gallon of biodiesel generates 1.5 RINs, and a gallon of renewable diesel can generate 1.6 RINs or 1.7 RINs. RINs cannot be sold until the fuel has been blended.
Since heating oil is not subject to RFS reporting, producers can separate the RINs attached to the biodiesel that has been blended into biofuels. These separated RINS are then attached to fuels sold to obligated parties. The producer is paid for the RINs, the refiner gets an additional RIN per gallon to meet their RVO, and the heating oil wholesaler or retailer purchases the “RINless” biofuel at a reduced price.
Examples of typical RIN transactions include:
- Generate - when a fuel is produced, a RIN is generated
- Buy - when an assigned/separated RIN is bought/traded by a buyer from a seller
- Sell - when an assigned/separated RIN is sold/traded by a seller to a buyer
- Separate - when a RIN is separated from the fuel to which it was originally assigned
- Retire - when a RIN is used to demonstrate compliance, or required to be retired for other purposes
Why Should You Care About the RFS?
The RFS sets the volume obligation, and is one of the main drivers in the value of RINs. Higher RIN prices can lower the cost of the fuel you deliver.
RIN pricing is also related to administration policies around renewable fuels, geopolitical events, and the “Bean Oil-Heating Oil” (BOHO) spread. Typically, when the BOHO spread widens, RIN prices rise to compensate for relatively higher soybean prices reducing blending margins; when the BOHO spread contracts, RIN prices tend to fall because blenders require less incentive to blend.
In the last three years, the D4 (biomass based diesel) RINs prices reached a high of $1.81 as of January 23, 2023, hit a low of $0.58 in October 2024, and floated around $1.07 in late December 2025. In 2025, 23.25 billion RINS were generated under the Renewable Fuel Standard, according to the EPA’s reporting in January 2026, of which only 255.48 million (1.09 percent) were generated by imported fuel.
The Status Quo: Pending
On June 17, 2025, the EPA published its proposed “Renewable Fuel Standard (RFS) Program: Standards for 2026 and 2027, Partial Waiver of 2025 Cellulosic Biofuel Volume Requirement, and Other Changes” in the Federal Register.
“EPA is proposing the applicable volumes and percentage standards for 2026 and 2027 for cellulosic biofuel, biomass-based diesel (BBD), advanced biofuel, and total renewable fuel. EPA is also proposing to partially waive the 2025 cellulosic biofuel volume requirement and revise the associated percentage standard due to a shortfall in cellulosic biofuel production. Finally, EPA is proposing several regulatory changes to the RFS program, including reducing the number of Renewable Identification Numbers (RINs) generated for imported renewable fuel and renewable fuel produced from foreign feedstocks and removing renewable electricity as a qualifying renewable fuel under the RFS program (eRINs).” Comments were accepted through August 8.
The Fact Sheet released by the EPA at that time noted, “Specifically, EPA is proposing to amend RFS regulations so that foreign biofuels and feedstocks would only generate 50 percent of the RIN value relative to domestic biofuels and feedstocks.”
The government’s rationale was that by reducing the RIN value for foreign biofuels and feedstocks, it would “decrease America’s reliance on imports, promote U.S. production, strengthen support for rural agricultural sectors, and increase American energy security.”
Regarding the RVOs, the EPA stated, “On June 13, 2025, EPA announced a proposed rule to establish required Renewable Fuel Standard volumes and percentage standards for 2026 and 2027, as well as to partially waive the 2025 cellulosic biofuel volume requirement and revise the associated percentage standard due to a shortfall in cellulosic biofuel production. The proposed volume requirements are listed below.”
NEFI submitted comments to the EPA regarding the proposed rule, “strongly supporting” the increases for 2026 and 2027, stating: “Our association agrees with EPA’s assessment that there is ample capacity and more than adequate feedstock availability to meet the proposed volume requirements in the years to come.
“In its 2019 Providence Resolution, the heating oil industry voluntarily pledged to reduce emissions through increased use of biofuels to support American farmers, enhance energy diversity and security, and meet consumer demand for cleaner fuels. Several state governments in the Northeast have recognized the benefits of biodiesel-blended heating oil and now require minimum blends statewide. As of July 1, 2025, these requirements are 10-percent in Connecticut and New York and 20-percent in Rhode Island, affecting more than 1.9 million households and requiring around 160 million gallons of biomass-based diesel (BBD) for minimum compliance in an average winter. This does not include retailers who blend above these amounts in these states or that blend on a discretionary basis in states without similar requirements. Note as well that these fuels are used primarily during the winter months, when transportation fuel demand is lowest, providing year-round stability for American feedstock growers and biofuel producers.
“The RFS is key to ensuring the availability of these fuels at competitive prices, enabling the heating oil industry to meet its voluntary commitments, comply with state blending requirements, remain competitive in an ever-changing market, and respond to growing demand for cleaner, American-produced fuels from customers – and to do so in a cost-effective manner that benefits small businesses and working families. Given this, NEFI is supportive of the higher renewable volume obligations (RVOs) for BBD.”
Following the comment period, the EPA published a supplemental proposal in September 2025, in which it proposed “to add a new SRE reallocation volume’ term in the percentage standard equations for 2026 and 2027 that, taken together, would account for the 2023–2025 exempted RVOs. In addition, we are revising our proposed percentage standards for 2026 and 2027 to include both the proposed SRE reallocation volumes and a better informed projection of exempted gasoline and diesel for 2026 and 2027.”
“In this action, we are co-proposing to create new SRE reallocation volumes for 2026 and 2027 equivalent to the 2023– 2025 exempted RVOs. We are also proposing SRE reallocation volumes for 2026 and 2027 equivalent to 50 percent of the exempted RVOs for these years and requesting comment on other SRE reallocation volumes for 2026 and 2027 equal to other amounts (e.g., 25 or 75 percent of the 2023–2025 exempted RVOs), as well as not accounting for any exempted 2023–2025 RVOs (i.e., no SRE reallocation volumes). Since the EPA has issued decisions for all the 2023 and 2024 SRE petitions that were before the Agency, we are able to determine the actual exempted RVOs for the 2023 and 2024 compliance years as of this time. Specifically, we used information from the SRE petitions and the EPA Moderated Transaction System (EMTS) compliance data to calculate the total exempted gasoline and diesel volumes for 2023 and 2024. In turn, we used these exempted volumes, together with the previously established percentage standards for 2023 and 2024, to calculate the exempted RVOs for these years.”
Steckel added, “As state blending requirements continue to rise and some households are choosing lower-carbon heating options, our members need confidence that renewable fuels will be accessible, affordable, and scalable. Higher RVOs help ensure adequate volumes are produced and distributed nationwide and protect energy choice for consumers.”
What Are Foreign Feedstocks Worth?
The proposed reduction in the RIN value for foreign feedstocks, purportedly to increase demand and production of domestic biofuels, could be problematic for the home heating industry.
Under the proposed “Set 2” rule, the RIN reduction would apply to all foreign feedstocks as well as any foreign-produced renewable fuel, regardless of whether those fuels were produced from domestic or foreign feedstocks.
Considering that imported feedstocks make up 30 percent of the United States’ lipid feedstock supply, and 70 percent of its used cooking oil (UCO) supply; halving the value of the RINS generated by imported feedstock would greatly affect the market.
NEFI’s comment letter outlined their concerns about EPA’s proposed 50 percent RIN discount for foreign fuels and domestic fuels produced from foreign feedstocks. “This provision would further constrain access to renewable fuel supplies in the Northeast, particularly given our geographic constraints. The Northeast liquid fuels market relies heavily on waterborne fuel delivery and is distant from regions where most domestic feedstocks and biofuels are produced. Moreover, as ABFA notes, the recently enacted One Big Beautiful Bill (PL 119-21) already provides substantial incentives for domestic feedstock use, making EPA’s proposed RIN discount both redundant and counterproductive. Trade policy tools are better suited to address concerns about foreign competition while preserving the flexibility needed for effective negotiations with trading partners. The RIN discount would result in substantial market uncertainty and disruption and potentially increase fuel costs for our members and their customers. NEFI urges EPA to withdraw this provision entirely and allow existing tax incentives and trade policy to address domestic production priorities.”
In a just-released report titled “Rewriting the RFS Playbook: The Impact of No Half-RIN and Higher RVOs on Projected Biomass-Based Diesel Production and Feedstock Use for 2026-2027,” (Hubbs, T. and S. Irwin. “Rewriting the RFS Playbook: The Impact of No Half-RIN and Higher RVOs on Projected Biomass-Based Diesel Production and Feedstock Use for 2026-2027.” farmdoc daily (16):31, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, February 25, 2026), the authors note:
“While a final RVO rulemaking has not yet been released by the EPA, there has been widespread reporting in the financial press and on social media about a compromise that would eliminate the half-RIN proposal entirely in exchange for higher biomass-based diesel RVOs … In addition, it appears that the proposal to discount non-ester renewable diesel from 1.7 to 1.6 RINs will be delayed until 2027.”
They also consider the effect on feedstock and production should the half-RIN provision be eliminated. “The higher RVOs do indeed benefit the domestic biomass-based diesel industry, with total capacity utilization effectively reaching 100 percent in 2027 under the updated RVOs ... By dropping the half-RIN disincentive on imported feedstock, domestic feedstock suppliers lose approximately 8 billion pounds of demand per year, a reduction of about 20 percent compared to what they would have received under the half-RIN regime. This loss flows directly to import suppliers, who emerge as one of the main beneficiaries of the policy compromise. In essence, by dropping the half-RIN, the domestic biomass-based diesel industry would secure higher volume mandates but at the cost of redirecting feedstock demand towards import suppliers.
“Biofuel producers benefit from higher RVOs and the certainty that the half-RIN’s complex import accounting will not be imposed on them, while domestic feedstock suppliers of animal fats, used cooking oil, and soybean oil will face a meaningfully smaller share of the total feedstock demand increase than would otherwise have been the case.”
We continue to await additional information on the RFS submitted to the OMB and the White House, and will update our readers accordingly.
