(US Treasury Department Internal Revenue Service) The Internal Revenue Service today issued guidance on the Section 45Z Clean Fuels Production Tax Credit to empower America’s crop and livestock farmers, ranchers, and fuel producers across the country and help them access the growing domestic biofuels market in a way that makes the Clean Fuels Production Credit work for them.
“Today's guidance helps America’s farmers, ranchers, and fuel producers access growing opportunities in the domestic biofuels market,” said IRS Chief Executive Officer Frank J. Bisignano. “This guidance helps unlock billions of dollars for America’s agricultural producers, provides greater certainty for investment across rural America, strengthens domestic biofuel production, and helps lower fuel costs for American consumers.”
Notice 2026-53 PDF provides the 2026 emissions rate table used to calculate the clean fuel production credit and provides additional guidance, including on the use of manure-derived fuels and regenerative agricultural practices, supporting American biofuel production.
Notice 2026-53
The Working Families Tax Cuts (WFTC) amended and extended section 45Z, including making several changes that require technical modeling updates to the 45ZCF-GREET model used to determine emissions rates. The section 45Z proposed regulations, which were issued February 4, 2026 and are under final consideration by the IRS and Treasury Department, proposed rules implementing the WFTC changes to the Clean Fuels Production Credit, including addressing how the annual emissions rate tables work and which table and models a producer should use to determine the emissions rate of a particular fuel.
Today’s notice provides certain technical modeling language used to implement WFTC-mandated model updates for manure-derived fuels. This notice addresses how producers should account for WFTC changes when using the emissions rate table and allowed models. The DOE is developing corresponding updates to the 45ZCF-GREET model.
The 45Z proposed regulations indicated that the IRS would provide further guidance on how United States Department of Agriculture (USDA) rules on regenerative agricultural practices will be integrated into the 45ZCF-GREET model once the USDA finalized its rules, which USDA did on June 29, 2026. This notice provides a safe harbor that will be available for 2025 clean fuel production.
The notice also provides transition rules for applying changes made by the WFTC when an allowed methodology has not yet been updated to reflect those changes, including rules addressing used cooking oil and other feedstocks. Among other changes, the law:
- Requires emissions rates to exclude emissions attributable to indirect land use change;
- Limits eligible transportation fuel to fuel derived exclusively from feedstocks produced or grown in the United States, Mexico or Canada;
- Prohibits negative emissions rates, except for transportation fuel derived from animal manure; and
- Requires distinct emissions rates for transportation fuels derived from specific animal manure feedstocks.
Background
The Clean Fuel Production Tax Credit, as modified by the WFTC, provides a tax credit for eligible clean transportation fuels produced domestically and sold in a qualified sale, including sustainable aviation fuel and other clean fuels. The credit amount generally depends on a fuel's lifecycle greenhouse gas emissions rate, with lower-emission fuels qualifying for larger credits.
Today's notice provides the 2026 emissions rate table used to calculate the credit and allows certain regenerative agricultural practices and farm-specific manure management practices to be reflected in emissions calculations, helping agricultural producers participate in the growing domestic biofuels market.
For agricultural feedstocks, the guidance allows taxpayers to account for qualifying low-carbon agricultural practices consistent with the U.S. Department of Agriculture’s technical guidelines and the 45Z-specific Feedstock Carbon Intensity Calculator. The guidance also provides transition relief for fuel produced in 2025 and 2026 from certain requirements relating to the development of a nutrient budget before nutrients are applied.
The guidance provides for distinct emissions rates for transportation fuel derived from specific animal manure feedstocks, as required by the WFTC. The 2026 emissions rate table includes dairy manure and swine manure, and Treasury and IRS anticipate that the 45ZCF-GREET model will be updated later in 2026 to include poultry manure and beef manure as primary feedstocks. The guidance also allows farm-specific prior manure management practices to be taken into account in certain circumstances, allowing emissions calculations to better reflect conditions on individual farms. READ MORE
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Excerpt from DTN Progressive Farmer: In particular, the guidance gives special treatment to manure-based fuels, rewards regenerative agriculture and limits the use of foreign feedstocks in fuels that generate the credit. In addition, the U.S. Department of Energy released an updated Greenhouse gases, Regulated Emissions, and Energy use in Technologies (GREET) model this week.
The IRS is giving special relief for 2025 and 2026 crops that were planted prior to the agency guidance, noting in the guidance, "for fuel produced in 2025 and 2026, the requirements (under the law) regarding the pre-application development of a nutrient budget are deemed satisfied for purposes of 45Z."
The IRS makes clear that taxpayers will have to prove any regenerative agriculture claims with actual evidence.
"A taxpayer must be able to substantiate the application of any nutrients (such as nitrogen, phosphorus and potassium) and measurable nutrient sources and removals that the taxpayer inputs into 45ZCF FD-CIC," the IRS said in the guidance.
"A taxpayer must also keep records sufficient to substantiate its claim for the 45Z credit."
Taxpayers qualify for the 45Z using only farming practices identified by USDA in its technical guidelines, the IRS said. Those practices include cover crops, no-till or reduced tillage, enhanced nutrient management, nitrogen inhibitors and manure applications.
Farmers will not be penalized for failing to have nutrient budgets prepared in advance for 2025 and 2026, because many crops were planted before USDA finalized its guidelines, the IRS said.
The National Corn Growers Association said on Wednesday the actions will "give safe harbor" to previously recognized on-farm practices in reducing the carbon intensity of fuels.
"We are very pleased to see these agencies reaffirm the positive actions from the administration earlier this year, which recognized the importance of existing regenerative practices," NCGA President Jed Bower said in a statement.
"We have been encouraged by the strong cooperation and emphasis on how this tax credit will benefit the individual farmer throughout the implementation process."
In addition, the IRS guidance excludes indirect land-use change as a factor in calculating carbon emissions for 45Z.
"For taxpayers using a version of the 45ZCF-GREET model that includes ILUC emissions to determine the emissions rate for a transportation fuel produced after Dec. 31, 2025, the ILUC value published in the 45ZCF-GREET model must be subtracted from the total life cycle analysis results (total LCA results)," the IRS said.
ANIMAL MANURE
The IRS said it was updating its emissions model to allow for dairy and swine manure to qualify for the 45Z.
"The Treasury Department and the IRS anticipate that an update to the 45ZCF-GREET model including dairy manure and swine manure as distinct primary feedstocks is forthcoming," the IRS said.
"As such, dairy manure and swine manure are included as primary feedstocks in the 2026 emissions rate table."
As part of that, livestock operations will be allowed to use a farm's actual manure management history instead of relying on a national average when calculating carbon scores.
The IRS notice said, "A taxpayer producing a transportation fuel derived from animal manure may use an alternative fate reflecting farm-specific prior manure management practices for the animal manure from which the taxpayer derived its transportation fuel."
Prior practices include manure storage in uncovered lagoons, deep pits, liquid/slurry, pasture/range/paddock, dry lot and solid storage.
So, if a dairy or swine operation has historically managed manure in a way that led to higher methane emissions, capturing that methane through an anaerobic digester and converting it to renewable natural gas may receive greater recognition in carbon counting.
Those operations, however, will be required to have records to support exactly how manure was handled before a given digester project was implemented.
"A taxpayer that cannot substantiate the farm-specific prior manure management practices of a given farm will not have avoided emissions included in the 45ZCF-GREET model for such farm's portion of the taxpayer's manure inputs," the IRS said.
New farms, however, would not qualify for the farm-specific benefit. The IRS said it was concerned that new livestock facilities could intentionally choose high-emitting manure systems to later create larger carbon reductions.
In addition, the IRS guidance said manure-based fuels qualify for negative emissions rates after Dec. 31, 2025.
Patrick Serfass, executive director of the American Biogas Council, said in a statement the IRS guidance was much needed.
"Since Congress created 45Z four years ago, the biogas industry has been waiting for the certainty needed to fully put this tax credit to work," he said.
"Billions of dollars of potential investment have been sidelined in recent years while companies waited to understand how 45Z would apply to their projects. Today's guidance provides a path to move that investment forward, build new biogas systems and turn more of the organic waste produced in our communities into domestic renewable fuel."
FOREIGN FEEDSTOCKS
The IRS guidance said transportation fuel produced after Dec. 31, 2025, must be exclusively derived from feedstocks grown in the U.S., Mexico or Canada to qualify for the 45Z.
"The Treasury Department and the IRS remain concerned about the ability to reliably distinguish between imported used cooking oil and palm oil, and the resulting risk of crediting ineligible fuels," the IRS said in its guidance.
In addition, fuel produced only in 2025 using non-North American used cooking oil imported into the U.S. potentially qualifies for the 45Z, according to the guidance, using the "applicable pathway." READ MORE
Excerpt from Energy.AgWired.com: A big focus of last week’s American Coalition for Ethanol 39th annual conference was on the 45Z clean fuel production tax credit, with the final panel on Friday serving up an overview of policy, modeling, and compliance for biofuel producers.
USDA released its final guidelines for the production of regenerative agricultural biofuel feedstocks in June and Kate Zook, Acting Director of USDA’s Office of Energy and Environmental Policy, explained that it covers corn, soy, sorghum, and spring canola. “The official calculator that is used to calculate the farm scale carbon intensity is USDA’s Feedstock Carbon Intensity Calculator,” said Zook. “It reports out in CO2e per bushel and it contains all the practices and crops with USDA’s rule. So it is meant to work in tandem with USDA’s rule.”
Zook said the Department of Energy still must incorporate the calculator into the GREET model required by statute, and then Treasury must formally cite the USDA regulations. “We know from the regulatory agenda that 45Z is aimed to be finalized in November of this year,” she said. “This is a huge deal. It’s a huge deal for agriculture. If there’s a way that we can pass that value down to the farm and allow the farmer to have some power in this market with their grain, that’s an excellent opportunity.”
Kari Buttenhoff and Jamey Cline, both with Christianson PLLP, provided some insight into the modeling and compliance pieces for ethanol producers, acknowledging that every plant is different and the program is complicated and still not yet finalized. “With different markets comes uncertainty,” said Cline. “And this is exacerbated by the fact we don’t have a final rule for 45Z and have sought interpretation for very complex regulations since they were released. The industry is having to comply with a new regulation that doesn’t have all the rules down yet on paper, nor are they fully understood. In fact, because the market was being developed in real time, pricing and other benefits had to be developed.”
Listen to the panel conversation:
The 45Z Playbook: Policy, Modeling, and Compliance for Biofuel Producers – panel
Kate Zook, Acting Director, Office of Energy and Environmental Policy, USDA
Kari Buttenhoff, Christianson
Jamey Cline, Partner, Christianson PLLP
45Z Playbook panel 54:44 READ MORE
(U.S. Environmental Protection Agency) Today, U.S. Environmental Protection Agency (EPA) announced decisions for 34 small refinery exemption (SRE) petitions under the Renewable Fuel Standards (RFS) program for 2025. In consultation with U.S. Department of Energy (DOE), EPA reviewed and considered information submitted by each petitioning small refinery. EPA then evaluated each SRE petition consistent with the Clean Air Act and case law.
Based on that analysis, EPA is exempting 1.76 billion RFS compliance credits, known as Renewable Identification Numbers (RINs), for 29 small refineries. EPA will propose to reallocate 100 percent of the difference between projected and actual exempted volumes for 2025 SREs into the 2026 and 2027 Renewable Volume Obligations (RVOs) before the end of October 2026.
Due to the agency’s 2025 SRE decisions, EPA will also be announcing a direct final rule to extend the 2025 RVO compliance date by 30 days to October 1, 2026. This will allow the market to appropriately account for the additional RINs.
EPA is making the following 2025 SRE determinations:
| EPA Determination |
Number of Small Refineries Receiving |
| Full (100%) |
18 |
| Partial (50%) |
11 |
| Denial (0%) |
3 |
| Ineligible (0%) |
2 |
In 2020, EPA established a methodology in regulation for predicting the expected volumes that would be exempted based on an average of the past three years. Before that rulemaking, SREs were not considered as part of the volumes – in other words, all SREs had the result of reducing volumes. Following EPA’s methodology, the agency estimated that 990 million RINs would be exempted in 2025 in “Set 2” and put into the volumes. However, due to more small refineries requesting exemptions and changes in financial circumstances, EPA is exempting more RINs than estimated in “Set 2.”
Based on agency experiences, DOE is evaluating how it has historically utilized their 2011 disproportionate economic harm methodology and the information needed for future small refinery petitions to account for current market circumstances in this new phase of the RFS program. DOE will continue to seek public feedback from all impacted stakeholders on these analyses.
Since the beginning of the Trump Administration, EPA has observed inaccurate and misleading reporting on the agency’s RFS actions that have contributed to significant market movements despite no official statement or action from the Administration. Most recently, misleading reports and information led to significant volatility in the RIN market. These incidents raise serious concerns about the potential misuse of material nonpublic information and possible market manipulation. EPA continues to work with the Commodity Futures Trading Commission and will expand its coordination to ensure compliance with all applicable federal laws and protect the integrity of the RIN market.
Information on the 2025 SREs can be found here. READ MORE
Related articles
- RFA: Refinery Exemptions ‘Unjustified,’ But Proposed Reallocation Approach Offers Encouragement (Renewable Fuels Association)
- EPA Exempts 1.76B RIN Gallons in 2025 -- EPA Waives 1.76B Gallons From 2025 RFS, Pledges Full Reallocation in 2026, 2027 (DTN Progressive Farmer)
- Clean Fuels Disappointed with EPA’s New Small Refinery Exemptions (Clean Fuels Alliance America)
- EPA grants small refiners 1.76 billion biofuel exemptions, nearly double initial estimate (Reuters)
- August 31, 2026 Decisions on Petitions for RFS Small Refinery Exemptions (U.S. Environmental Protection Agency)
- Statement from MN Bio-Fuels on Federal Government Decision to Grant More Exemptions to Renewable Fuel Standard Requirements (Minnesota Bio-Fuels Association)
- 100% Reallocation of Massive Refinery Exemptions Must Move Quickly to Prevent Erosion of Trump’s Historic 2026-2027 RFS Blending Levels (Iowa Renewable Fuels Association)
- EPA extends 2025 RFS compliance reporting deadline (Ethanol Producer Magazine)
- ASA Statement on Small Refinery Exemptions & RIN Reallocation (American Soybean Association)
- SABR thanks White House for addressing biodiesel, soybean industry concerns over small refinery exemptions (Sustainable Advanced Biofuels Refiners)
- Talk of increased refinery exemptions causing Iowa biofuels industry concern (KSCJ)
- Refiners granted highest level of biofuel waivers since 2017 (Bloomberg)
- Trump expands biofuels exemptions for small oil refiners (Politico Pro)
- EPA Waives Large RFS Volume, But Plans ‘Reallocation’ To Compensate (Inside EPA)
- White House to convene refiners as fuel prices worries mount -- The meeting with representatives from U.S. oil refiners comes as the average U.S. gasoline price is still hovering above $4 per gallon. (Politico Pro)
- Soybean futures hit highest since 2023 on US biofuel exemptions (Bloomberg)
- EPA issues decisions on 34 SRE petitions (Ethanol Producer Magazine)
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Missouri Soybean Association Statement on Small Refinery Exemptions & RIN Reallocation: MSA appreciates continued commitment to historic Renewable Fuel Standard volumes and strong domestic demand for U.S. soy (Missouri Soybean Association)
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EPA and Small Refinery Exemptions: 2, 4, 6, 8 — Reallocate! Making Farmers Whole — or Making Another Hole for Farmers to Fall Into? (Biofuels Digest)
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Trump Ramps Up Pressure on Squeezed Refiners to Ease Pump Prices (Bloomberg/Yahoo! Finance)
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Biofuels industry reaction to SRE decisions mixed (The Fence Post)
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RFA Connects with Farmers at Farm Progress Show (Energy.Agwired.com; includes AUDIO)
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EPA lets Iowa oil refineries skip blending ethanol, other biofuels into fuel (KETV Omaha/Governors/ Biofuels Coalition)
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What They Are Saying: Leaders Across U.S. Applaud EPA’s Action on 2025 Small Refinery Exemptions (U.S. Environmental Protection Agency)
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Ethanol Report from the 2026 Farm Progress Show (Energy.AgWired.com)
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A quiet storm's brewing —and it could change everything before the midterms -- ... EPA exempts a few dozen refineries around the country from having to integrate biofuel into their diesel and gasoline products (Grist/AlterNet)
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EPA Small Refinery Exemptions Impact Ag Markets: OSU’s Todd Hubbs on Biofuels, Wheat Basis, and Harvest Strategy (Oklahoma Farm Report)
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Iowa biofuel industry presses EPA after refinery exemptions (Daily Nonpareil)
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Senator says changes to biofuel blending quotas come with uncertainty (Brownfield Ag News; includes AUDIO)
Excerpt from Renewable Fuels Association: The U.S. Environmental Protection Agency today granted dozens of new small refinery exemptions from 2025 Renewable Fuel Standard blending requirements and laid out a proposed plan to restore the lost renewable fuel volume in the near future.
Of the 34 pending exemption petitions, EPA granted full exemptions to 18 and partial (50 percent) exemptions to 11. It also denied three petitions and determined two petitions to be ineligible. This represents a total of 1.76 billion exempted RINs, or renewable fuel blending credits. EPA simultaneously announced it will propose to reallocate 100 percent of the newly exempted renewable fuel volume into the 2026 and 2027 renewable volume obligations before the end of October 2026.
“While we continue to believe most of the SREs issued today are completely unjustified, we are somewhat encouraged that EPA is taking steps to minimize the damage through reallocation,” said RFA President and CEO Geoff Cooper. “The proposed plan laid out by EPA today 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. At a time when oil refiners are reporting record-high profit margins, gasoline supplies are tightening, and consumers are paying record-high prices at the pump, the administration should focus on efforts to increase—not decrease—the domestic production and use of more affordable biofuels like ethanol.”
Cooper noted that ethanol with a RIN credit attached is selling for $2 per gallon wholesale today, compared to $3.08 per gallon for gasoline, underscoring the fact that ethanol is helping to provide economic relief at the pump for American families.
Still, unwarranted SREs continue to plague the RFS with uncertainty and instability, Cooper said, noting that reform of the “broken SRE program” is needed. “The RFS has been in place for more than 20 years, and Congress never intended for SREs to be a permanent entitlement for Fortune 500 oil refining companies,” he said. “The exemptions were always meant to be a temporary measure to give truly small, independent refiners a little more time to come into compliance with the RFS program. Unfortunately, many so-called small refiners have been allowed to exploit this loophole for two decades, putting American consumers, farmers, and biofuel producers on the losing end.”
EPA’s own analyses show that RIN costs for all refiners—big and small—are passed along to buyers of refined fuels at the wholesale level, and those costs are offset when lower-cost renewable fuels are blended with gasoline, Cooper noted.
Media reports on the looming SRE announcement led to an effort by RFA and its allies across the agriculture and biofuels industry to soften the blow. Numerous state and federal lawmakers, members of the Trump administration, and other leaders also stepped in to voice strong support for renewable fuels, Cooper said. “We are grateful to the many elected and appointed officials who spoke out publicly over the past week about the potential damage these exemptions could do to farmers, renewable fuel producers, and American families,” he said. “They understand what’s at risk in their home states and districts, and we appreciate their willingness to stand up for their constituents.”
June polling for RFA by Morning Consult found that more than three-quarters of respondents with an opinion want oil companies to be required to meet their renewable fuel blending requirements. Less than a quarter want oil companies to be allowed to avoid them. READ MORE
Excerpt from Clean Fuels Alliance America: 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.
“Clean Fuels and its members are extremely grateful for the quick action of Senators Chuck Grassley, Joni Ernst, Representative Ashley Hinson, and numerous other congressional champions who worked to ensure that EPA’s relief measures for small refineries do not come at the expense of America’s biofuel producers and farmers.” READ MORE
Excerpt from DTN Progressive Farmer: National Corn Growers Association President Jed Bower said corn growers were "disheartened" by the number of SREs granted.
"We are thankful that the Trump administration is taking action to offset this development by pledging to reallocate these RINs," Bower said in a statement. "Reallocation is essential for protecting farmers, biofuel producers and consumers alike."
The American Soybean Association said on Monday that it was thankful for the plan to reallocate the gallons waived.
"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," said Dave Walton, ASA vice president and Iowa soybean farmer.
"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."
Growth Energy CEO Emily Skor said the group had not changed its position that SREs should be granted only when refiners "prove disproportionate economic hardship."
"It's difficult to see how these refiners have met this threshold when they're simultaneously reporting sky-high and, in some cases, record-setting earnings," she said in a statement.
"We will work with EPA to fully account for lost biofuel gallons and make producers and farmers whole."
...
Devin Mogler, president and CEO of the National Oilseed Processors Association, said the exemptions had created uncertainty in the market.
"President Trump's strong RFS put American agriculture on a path toward greater certainty, investment and growth, and we appreciate the president and Congress stepping in to protect that progress," Mogler said.
"We remain disappointed by the sheer volume of these refinery exemptions and the uncertainty they have injected back into the market. But restoring waived gallons to the established RFS volumes is critical to sustaining domestic growth, creating stronger markets for American farmers and reducing our reliance on China."
PETROLEUM SRE OPPOSITION
The Trump administration continued forward with the proposal even after the American Petroleum Institute warned EPA Administrator Lee Zeldin in a letter on Monday that granting a higher volume of SREs could be harmful to the market. READ MORE
Excerpt from Reuters: U.S. oil refiners have waged a long lobbying battle with agricultural and biofuel industries over the Renewable Fuel Standard, which requires refiners to blend renewable fuels into gasoline and diesel or purchase credits known as renewable identification numbers, or RINs.
...
Refineries owned by Marathon Petroleum and Chevron were among those that received exemptions, according to the EPA. READ MORE
Excerpt from Minnesota Bio-Fuels Association: Association says it will harm farmers and significantly reduce demand for biofuels
Today, the Environmental Protection Agency (EPA) made an announcement that they are significantly expanding the number of small-refinery exemptions for 2025 under the Renewable Fuel Standard (RFS) requirements. The Minnesota Bio-Fuels Association (MN Bio-Fuels) Executive Director Brian Werner released the following statement in response to the EPA’s decision:
"Today’s decision by the EPA is a setback for farmers, ethanol plants, and our ag economy. Exempting oil refiners from their blending obligations won’t lower gasoline prices. As we’ve seen in Minnesota with E15, blending more biofuel into our fuel supply lowers the price consumers pay at the pump.
We appreciate that the recently finalized Renewable Volume Obligations (RVOs) set the highest biofuel blending targets in history, and that’s why it is especially confusing to see the EPA backtrack today. We share the Administration’s desire to make fuel more affordable for American families and small businesses, but the way to do that is through expanding access to year-round E15 and maintaining strong RVOs.
The announcement includes a statement of intent to propose reallocating 100 percent of the nearly 800 million gallons of lost biofuel demand approved in these exemptions back into the 2026 and 2027 RVOs. The EPA needs to follow through on that promise, or this announcement could undermine the economic viability of the biofuels industry." READ MORE
Excerpt from Iowa Renewable Fuels Association: IRFA Urges EPA to Account for Any Changes to 2026-2027 Refinery Exemptions
Today the U.S. Environmental Protection Agency (EPA) granted 29 refinery exemptions (SREs) to Renewable Fuel Standards (RFS) blending levels for the 2025 compliance year. T
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“Every day that passes while these new refinery exemptions are final but the reallocation is hypothetical leaves renewable fuels producers and farmers in the lurch,” said Monte Shaw, Executive Director of the Iowa Renewable Fuels Association. “The EPA must act expeditiously to propose and finalize a rule that reallocates 100 percent of the new refinery exemptions. Nearly a billion gallons of renewable fuels demand hangs in the balance.”
President Trump garnered much praise from the agriculture community in March by finalizing the most robust RFS blending levels in history for 2026 and 2027, called the Set 2 rule.
“Since President Trump put the RFS back on track in March, it has been doing exactly what it was supposed to – driving demand for biofuels,” stated Shaw. “In Iowa, we had biodiesel plants that were shuttered or running at very reduced rates. Today they are producing at full capacity, buying soybean oil from our farmers, and hiring back workers that had been let go. It is almost unimaginable to pull the rug out from under this success story by granting what we believe are unjustifiable refinery exemptions. Exemptions should be extremely rare and only granted when a refiner experiences economic hardship due to the RFS. That’s just not happening. While we are disappointed by the exemptions, a swift and full reallocation can preserve every gallon of renewable fuels demand under the RFS.”
The March RFS rule also prospectively reallocated projected refinery exemptions for 2026-2027, similar to the 2025 projections. While EPA has not announced its intentions, if the agency granted similar refinery exemptions in 2026 and 2027 as it did in 2025, an additional 1.6 billion gallons of renewable fuels demand would be in jeopardy.
“The EPA should also make clear the agency will take steps to protect the historic RFS blending levels finalized in March,” stated Shaw. “Reallocating the new 2025 exemptions is important, but so is preventing any backsliding on 2026-2027 blending levels. The market needs certainty. The record-breaking RFS levels don’t mean a thing if they are undermined through unjustified refinery exemptions. IRFA members urge EPA to commit to full reallocation of any 2026-2027 refinery exemptions in excess of the projections formalized in the Set 2 rule.”
Shaw concluded: “We want to thank the Iowa delegation and all the renewable fuel champions for speaking up loudly when exemption rumors first surfaced. While we may disagree with the exemptions, our united voices ensured that 100 percent reallocation was part of the decision. Now we’ll stand united to ensure 100 percent reallocation is expeditiously implemented.”
The Iowa Renewable Fuels Association represents the state’s liquid renewable fuels industry and works to foster its growth. Iowa is the nation’s leader in renewable fuels production with 42 ethanol refineries capable of producing over 5 billion gallons annually – including 34 million gallons of annual cellulosic ethanol production capacity – and 8 biodiesel facilities with the capacity to produce 408 million gallons annually. For more information, visit the Iowa Renewable Fuels Association website at: www.IowaRFA.org. READ MORE
Excerpt from Sustainable Advanced Biofuels Refiners: Biodiesel would have taken the brunt of the negative impact of this unexpected expansion of SREs. SABR represents stakeholders throughout the biodiesel value chain including soybean farmers and processors, biodiesel producers, glycerin refiners, and fuel distributors and retailers. Together, these industries support millions of American jobs and generate billions of dollars in domestic economic activity while supplying homegrown, renewable fuel to the nation’s diesel supply. Without the administration’s decision to address the additional exempted volumes as a result of the expanded SREs for compliance year 2025, those businesses and the investments they have made to meet national fuel needs would have been placed at risk.
The year 2025 was devastating for the biodiesel industry because of major federal energy and tax policy uncertainty. This uncertainty lasted through the first quarter of 2026, when the administration wisely signaled some hope for a recovery by issuing robust volumes under the RFS. Biodiesel producers immediately stepped up to meet those prescribed volumes by adding much-needed fuel to the domestic diesel supply at a time of global fuel shortages and price increases. That additional supply is making U.S. diesel prices lower than they otherwise would be. READ MORE
Excerpt from Ethanol Producer Magazine: According to EPA’s SRE data dashboard, 8 SRE petitions remain pending, including four compliance year 2026 petitions and four compliance year 2027 petitions.
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The American Coalition for Ethanol also expressed disappointment in the EPA’s action to approve SREs. “American farmers continue to struggle to make ends meet, while oil refineries are posting record profits,” said Brian Jennings, CEO of ACE. “In this context, it does not make sense to exempt any refiners from blending low-cost renewable fuels into their outrageously expensive petroleum products. Nevertheless, we appreciate that EPA is taking steps to reallocate the exempt volume to non-exempt refiners and look forward to seeing that promise fulfilled. Until reallocation is final and complete, every exempted gallon is an economic drain on rural America.
“The integrity of the RFS depends on ensuring volume obligations translate into real-world demand. Any gap between required volumes and actual blending undermines the program and creates uncertainty for ethanol producers, farmers and rural communities,” Jennings added. “ACE, along with others in the biofuel industry, has spent significant time defending the RFS and ensuring proper limits on SRE authority through federal circuit and Supreme Court decisions. Any effort to weaken the specific criteria dictated by the courts is troubling, and we will be monitoring any such efforts by DOE.
“SRE controversy has essentially hijacked efforts in the Senate to finally adopt legislation simply allowing retailers nationwide to sell low-cost E15 to their customers year-round. Given EPA’s actions today, we once again call on the Senate to work in a bipartisan way to get E15 legislation over the finish line this year.
“Finally, EPA has the authority to set volumes that require more than 15 billion gallons of conventional biofuels annually. We encourage EPA to seriously consider higher volumes in Set 3 to account for any negative impact from SRE gallons not being fully reallocated and for potential E15 increases.” READ MORE
Excerpt from Biofuels Digest: The seed got better. The fertilizer got better. The machinery got bigger, faster and astonishingly precise. Hybrids arrived, then biotechnology, GPS, variable-rate application and a century’s accumulation of knowledge about how to coax more corn out of the same Iowa dirt.
Today, Iowa corn yields can run north of 200 bushels an acre. American agriculture solved the problem of abundance. It never solved the problem that comes next.
Who buys the next bushel?
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Year-round E15 offered the prospect of opening still more of America’s gasoline market to ethanol. For a farmer wondering where the next increment of corn demand might come from, Washington appeared, for once, to be pointing in a promising direction.
Except permanent year-round E15 still isn’t settled.
And now come the small-refinery exemptions.
On Monday, EPA ruled on 34 petitions covering the 2025 Renewable Fuel Standard.
Eighteen refineries received full exemptions.
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Add it together and 1.76 billion RINs of renewable-fuel obligations were excused.
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If Washington promises you a market on Monday and exempts somebody from it on Tuesday, exactly how much market do you have on Wednesday?
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Think of a Renewable Identification Number, or RIN, as essentially the receipt attached to renewable fuel.
Make qualifying renewable fuel and RINs are generated. Refiners and importers have annual obligations requiring them to acquire and retire enough of those receipts. Blend renewable fuel and you can acquire them that way. Don’t have enough and you can buy RINs on the market.
Congress also provided an escape hatch for small refineries suffering “disproportionate economic hardship.”
Fair enough.
If a genuinely struggling refinery is being pushed toward the wall by a federal mandate, nobody gains much by pushing it through the wall.
The difficulty is what happens to renewable-fuel demand when the refinery gets out.
An SRE says, in effect:
You don’t have to collect these receipts.
Reallocation says:
Fine. Put the volume back into the system and spread the requirement across the obligated parties.
Translated into Page County English:
The small refinery gets out. The gallons don’t.
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When EPA established its renewable-fuel requirements, it wasn’t naïve enough to assume that no small refinery would receive an exemption.
EPA had already projected 990 million RINs worth of 2025 small-refinery exemptions and accounted for them in setting the volumes.
Call that the hole Washington knew about.
Then Monday arrived.
The exemptions EPA actually granted totaled 1.76 billion RINs.
Call that the hole Washington actually dug.
Subtract one from the other and you get roughly 770 million RINs of unexpected exemptions.
And that distinction matters.
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You cannot repair a hole in the diesel market by pouring ethanol into it.
And today the implications run far beyond biodiesel.
Renewable diesel is pulling on oils and fats. Sustainable Aviation Fuel increasingly reaches into overlapping agricultural and low-carbon feedstock systems. Soybean oil, animal fats, used cooking oils and other feedstocks now participate in an interconnected industrial market.
So an exemption isn’t merely an argument between a little refinery and a corn ethanol plant.
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And eventually the investment committee deciding whether the next plant gets built.
That’s the larger importance of reallocation.
The RFS isn’t simply setting today’s fuel volumes anymore.
It is helping send tomorrow’s capital signals.
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The statute provides exemptions for small refineries suffering disproportionate economic hardship.
Biofuel organizations understandably ask how widespread hardship can coexist with strong refining profitability.
They also question how much RIN compliance actually costs a refinery after costs are passed through in petroleum-product prices.
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Then an exemption can arrive after the market has already organized itself around the mandate.
The industry’s phrase for what follows is demand destruction.
It sounds abstract.
It isn’t.
It means somebody invested, planted, produced or financed something expecting a customer that government policy said would exist — and government policy subsequently made some of that customer disappear.
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A small refinery can face legitimate hardship.
Congress provided relief for exactly that reason.
But the Renewable Fuel Standard was created to establish renewable-fuel demand, not merely to distribute paperwork among refiners.
If one party is exempted, account for the volume elsewhere.
Don’t erase it.
Because the consequences no longer stop at the ethanol plant.
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EPA still has to finish the job.
It says it will propose the additional reallocation before the end of October.
Until that becomes enforceable arithmetic, the unexpected missing demand remains principally a promise that Washington intends to restore it. READ MORE
Excerpt from Bloomberg/Yahoo! Finance: (U.S. President Donald) Trump got an earful about federal biofuel-blending requirements, as some refining executives used the hour-long meeting (on September 1, 2026) to argue that quotas compelling them to mix alternative fuels into gasoline are raising pump prices, according to people familiar with the conversation who asked not to be named because it was private.
Roughly a dozen executives from fuel refining and distribution companies joined Trump....
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The gathering was dominated by talk about the Renewable Fuel Standard, the federal law that compels refiners to blend corn-based ethanol, soy-based biodiesel and other alternative fuels into gasoline and diesel, people said. Industry representatives took aim at the administration's decision to set record-high biofuel-blending quotas, with some casting the targets as unattainable and describing them as driving up gasoline costs, some of the people said.
Tensions on the issue were heightened after Trump's Environmental Protection Agency on Monday granted a host of small refineries exemptions from some of those mandates. At the same time, in a blow to the owners of large refineries, the administration also said it would seek to ensure other, non-exempted facilities are on the hook to blend those waived volumes in their stead.
Renewable fuel quotas are a particularly thorny subject for Trump, dividing the agriculture and oil industries, two key constituencies. Administration officials on Tuesday acknowledged the political dynamic in suggesting their hands were tied on the issue, some of the people said.
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While gasoline prices have fallen from this year's peak of more than $4.50 a gallon in May, they remain about $1 higher than at the Feb. 28 start of the war — much less the $2.79 low Trump notched in January. Trump says prices will eventually ease and that Americans understand his stated aim of preventing Iran from obtaining nuclear weapons. READ MORE
Excerpt from The Fence Post: National Farmers Union President Rob Larew said, “We appreciate the administration’s decision to fully reallocate the renewable identification numbers affected by these exemptions, protecting a stable market for family farmers.”
“Farmers spoke out about the harm they’d face without full reallocation, and we appreciate EPA listening to those concerns. The uncertainty around potential changes to the Renewable Fuel Standard has not been helpful at a time when farm country needs predictability,” Larew said. “We’re glad to see the integrity of the program upheld and continued demand for what our farmers grow.”
Last week the American Farm Bureau Federation’s Intel service published a report explaining small refinery exemptions.
“Farm Bureau opposes small refinery exemptions, but if exemptions are granted, the associated RFS obligations should be reallocated to preserve overall renewable fuel demand the RFS was designed to support,” the report said.
Farm Bureau President Zippy Duvall said Monday, “While we have concerns about granting any small refinery exemptions that undercut a strong domestic biofuels market for farmers, we are pleased to see EPA’s commitment toward 100% reallocation of exempted volumes before the end of October. Reallocation is necessary to maintain robust demand for American grown crops.”
Sen. Amy Klobuchar, D-Minn., the ranking member of the Senate Agriculture Committee who is running for governor of Minnesota, said, “Farmers are already facing the headwinds of the president’s tariffs, rising input costs from the war in Iran, and dwindling international markets, and now the administration is choosing to damage another critical market for American farmers.”
“I led bipartisan efforts to secure strong blending levels through both Republican and Democratic administrations and this announcement walks back that progress. I will continue to fight for stronger blending levels and a reallocation that helps Minnesota farmers,” Klobuchar said. READ MORE
Excerpt from Ethanol Report: The 2026 Farm Progress Show kicked off September 1 in Boone, Iowa with breaking news for the ethanol industry. On Monday, the Environmental Protection Agency announced new small refinery exemptions for the 2025 compliance year, along with a plan to reallocate the lost volume. And second, breaking in the wee hours of Tuesday morning, California lawmakers passed a fix to hopefully allow sales of E15 to finally happen in the state.
Renewable Fuels Association President and CEO Geoff Cooper, along with Robert White, Senior VP of Industry Relations & Market Development, were at the show to talk with farmers and the media about those two developments and what they mean for the industry and agriculture. This edition of The Ethanol Report includes their comments, as well as part of Secretary of Agriculture Brooke Rollins’ remarks at Farm Progress Show.
Ethanol Report 9-4-26 12:21 READ MORE; includes AUDIO
Except from Grist/AlterNet: Even with the waivers, gasoline prices in many states are $1.50 above their pre-Iran highs. The early months of the conflict hinged on the question of the Strait of Hormuz, but even if the strait were to open tomorrow, the gasoline market will remain tight, and neither more oil from Venezuela nor cheaper inputs will free up refining capacity.
“I think it’s going to have a tremendous impact; ultimately, prices are going to come down,” said Trump at the Oval Office on Monday. “Will it happen before the election? I can’t tell you that.” The stubborn high prices do not bode well for Republicans in the midterm elections. On average, the president’s party loses 25 more congressional seats in midterm elections after gas prices spike than in those after gas prices go down, according to a Politico analysis of elections since 1978. READ MORE
Excerpt from Brownfield Ag News: A member of the Senate Ag Committee says reallocating the volume of small refining exemptions into future blending quotas over the next two years is an attempt to balance competing interests.
“It’s threading a needle and we probably haven’t gotten the needle threaded correctly yet.”
Jerry Moran of Kansas tells Brownfield, “That, of course, is a long time and remains to be seen, so that creates some uncertainty. The idea behind that is certainly supported by renewable fuels processors in Kansas and across the country.”
He says it can be difficult to create a solution that benefits both the ag and refining industries. “Everybody is affected in different ways. It’s a reminder that every time we intrude – it’s a story that the cattlemen would remind us of – that every time we intrude into the economy and the free-market system, there are those who benefit and those who do not. Some are harmed in significant ways.”
Moran says the U.S. needs additional refining capacity and does not want to see the changes impact soybean crushing facilities. READ MORE; includes AUDIO