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EPA’S PROPOSED BIOFUEL TARGETS COULD STALL INDUSTRY GROWTH AND DRIVE UP PRICES, NEW RESEARCH WARNS

A new study published by the Advanced Biofuels Association (ABFA) finds that the Environmental Protection Agency’s (EPA) proposal to cut the Renewable Identification Number (RIN) by 50% for fuels made from foreign feedstocks, as part of its 2026 and 2027 Renewable Volume Obligations (RVOs), could stall the growth of the biomass-based diesel (BBD) industry and lead to higher costs for consumers.

The report, prepared by GlobalData Agri, confirms that there is sufficient domestic feedstock to meet the EPA’s projected production volumes of 4.3 billion gallons in 2026 and 4.6 billion gallons in 2027. But the market opportunity is far greater. According to estimates from Lipow Oil Associates, U.S. BBD demand is expected to reach 7 billion gallons by 2027 and grow to 9 billion gallons by 2030. Meeting that demand, however, will require continued access to global feedstock markets. EPA’s proposal to cut the RIN value in half for fuels made with imported feedstocks would limit overall BBD market growth and drive-up consumer prices – despite global supplies being more than sufficient to support expansion of American biofuel innovation.

“This rule, as currently drafted, could threaten continued investment, limit consumer access to innovative American-made fuels, and artificially drive up prices,” said Michael McAdams, President of ABFA. “But there’s still time to course-correct. The EPA has an opportunity to make smart, targeted adjustments that protect consumers and support continued industry growth.”

The study estimates that the policy shift would introduce significant cost pressures across the renewable fuel supply chain. By reducing credit values for imports, the rule would effectively create a $250 to $400 per metric ton premium for domestic feedstocks. A $200/metric ton rise in U.S. soybean oil prices alone could drive up D4 RIN prices by $0.42. These price pressures are expected to draw more domestic feedstocks away from food and other non-biofuel uses – an unforced consequence of articificially distorting a global energy market that has plenty of supply for both.

ABFA recently shared these concerns at an EPA testimony and argued that the proposal also marks a significant departure from longstanding precedent under the Renewable Fuel Standard (RFS), which, under the Clean Air Act, requires that BBD volumes be stated in actual gallons. ABFA argues that shifting the basis of compliance from gallons to RINs – and discounting those RINs based on feedstock origin – adds unnecessary complexity and legal uncertainty to the program.

“EPA’s job is to set targets that reflect what the market can deliver – not to pick winners and losers,” McAdams added. “This kind of sudden upending of the RFS, which has long been the most important piece of legislation supporting domestic biofuel producers, threatens investment, growth, and the future of American energy dominance.”

As the agency moves toward a final rule, ABFA urges the EPA to:

  • Increase the biomass-based diesel requirement to at least 5.75 billion gallons, reflecting real-world capacity and market demand.
  • Maintain volume targets in actual gallons, in accordance with the Clean Air Act and past implementation of the RFS.
  • Withdraw the proposed 50% devaluation for RINs generated from foreign feedstocks, preserving flexibility and cost-effectiveness in meeting national biofuel goals.

The full study summary is available here.