by Todd Hubbs and Scott Irwin (farmdoc daily) The EPA’s recent trilogy of RFS decisions represents one of the most consequential regulatory developments of the last decade for biomass-based diesel markets. Higher RVOs, more restrictive small refinery exemptions, and mandatory reallocation create substantially higher requirements for 2026-2027. In our most recent article (farmdoc daily, November 12, 2025), we projected dramatic increases in domestic biomass-based diesel production and feedstock use under the EPA’s proposed “half RIN” credit for imported feedstock and imported fuel. The purpose of this article is to review the projections and highlight a critical finding—the market impacts are heavily backloaded to 2027. The article builds upon the analysis of the renewable diesel boom found in a series of previous farmdoc daily articles.
Analysis
In our November 12th article, we derived updated projections of required D4 RIN (renewable identification number) generation for 2026-2027, incorporating three major EPA rulemakings: proposed RVOs for 2026-2027, comprehensive SRE decisions, and a reallocation policy framework. We accounted for recent SRE approvals announced in November 2024, totaling 740 million gallons across 2021-2024. The analysis considered two reallocation scenarios (100 percent and 50 percent) for historical SREs and assumed full reallocation of 2026-2027 SREs within their respective compliance years. The projections showed that average D4 RIN generation increases from 7.84 billion gallons over 2023-2025 to 9.43 billion gallons across 2026-2027—a 20 percent increase. These represent fixed requirements that must be met through various combinations of domestic and imported biomass-based diesel production.
The critical policy variable is the EPA’s proposed “half RIN” for domestically produced biomass-based diesel using imported feedstock and for imported biomass-based diesel. With D4 RIN prices around $1 per RIN gallon, the half RIN proposal translates to a roughly 80-cent per gallon credit reduction with a 1.6 RIN designation—large enough to fundamentally reshape production decisions.
We analyzed four scenarios differing primarily in import responses. The “EPA” scenario assumes imports remain fixed at 2024 levels. The “No Imports” scenario assumes zero imports given the credit disadvantage. The “Split” scenario averages the first two. The “Status Quo” scenario assumes no half RIN implementation. All scenarios share the same RVO assumptions but differ in how domestic versus imported production responds.
Under the three half RIN scenarios, FAME biodiesel production increases an average of 39 percent over 2026-2027 compared to the 2023-2025 average, while renewable diesel production rises 44 percent. These increases drive aggregate capacity utilization from an average 71 percent over 2023-2025 to rates approaching or exceeding 100 percent by 2027. By 2027, utilization rates reach or slightly exceed full capacity, marking a dramatic reversal from the recent period of oversupply.
...
Implications
The EPA’s recent RFS decisions will drive substantial increases in biomass-based diesel production and feedstock demand over 2026-2027, but the full impact is heavily backloaded to 2027. The massive D4 RIN bank—peaking at 3.0 billion gallons in 2024—provides a critical buffer moderating the immediate impact in 2026. However, as this bank is drawn down, the full force of higher RVOs and the half RIN policy will hit the markets in 2027. Total feedstock demand will increase 19 percent in 2026 and 48 percent in 2027 relative to 2023-2025. For domestic feedstock, the increases are even more dramatic: 63 percent in 2026 and 113 percent in 2027. This backloading means 2027 is the critical year when production approaches full capacity utilization and domestic feedstock demand reaches 48.8 billion pounds—61 percent of total estimated U.S. feedstock availability.
Market participants should anticipate a two-stage adjustment. In 2026, obligated parties will draw down the RIN bank while ramping up production, leading to moderately higher feedstock prices. In 2027, with the RIN bank at minimum levels, markets face the full policy impact. This suggests feedstock price pressures, production bottlenecks, and RIN price volatility will be more severe in 2027 than 2026. Important uncertainties remain. The EPA has not finalized the half RIN proposal, and a recent media report (Renshaw, 2025) suggests the Trump Administration is considering delaying the implementation by one or two years. In addition, feedstock supplies may respond more robustly to higher prices than anticipated. Nevertheless, the backloaded nature of the feedstock impact to 2027 appears robust across scenarios, making this a key consideration for strategic planning by market participants.
References
Bukowski, M., B. Swearingen, and T. Hubbs. “Special Article: Estimating Biomass-Based Diesel Feedstock Availability in Marketing Years 2018/19-2023/24.” Oil Crops Outlook, U.S. Department of Agriculture, Economic Research Service, Situation and Outlook Report, February 2025. https://ers.usda.gov/sites/default/files/_laserfiche/outlooks/110935/OCS-25b.pdf?v=96817
Hubbs, T. and S. Irwin. "Rewriting the RFS Playbook: The Impact of Revised RVOs on Projected Biomass-Based Diesel Production and Feedstock Use for 2026-2027." farmdoc daily (15):209, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, November 12, 2025.
Renshaw, J. “Trump Administration May Delay Biofuel Import Credit Cuts as Refiners Balk.” Reuters, November 19, 2025. https://www.reuters.com/sustainability/climate-energy/trump-administration-may-delay-biofuel-import-credit-cuts-refiners-balk-2025-11-19/
Related articles
- Rewriting the RFS Playbook: The Impact of Revised RVOs on Projected Biomass-Based Diesel Production and Feedstock Use for 2026-2027 (farmdoc daily)
Excerpt from farmdoc daily: The purpose of this article is to project biomass-based diesel production and feedstock use for 2026-2027 under different scenarios regarding the impact of the half RIN proposal. The article builds upon the analysis of the renewable diesel boom found in a series of previous farmdoc daily articles.
Analysis
We begin with projections of D4 RIN generation for 2026-2027. Our first projections were presented in a recent farmdoc daily article (November 5, 2025), and the estimated balance sheets for 2023-2027 were based on three important EPA rulemakings: i) proposed renewable volume obligations (RVOs) for 2026 and 2027 released in June 2025; ii) a comprehensive rulemaking on small refinery exemptions (SREs) over 2016-2024 that was released in July 2025; and iii) a reallocation policy framework for small refinery exemptions published in September 2025. Two scenarios for reallocation of 2023-2025 SREs in 2026-2027 were presented: 100 percent and 50 percent reallocation. Projected SREs for 2026 and 2027 were also assumed to be fully reallocated within each compliance year.
On November 7th, the EPA announced a new round of SRE decisions covering 2021-2024 petitions. Out of the total of 16 petitions considered, 2 were granted full exemptions, 12 were granted partial 50 percent exemptions, and 2 were denied. The total exempted RVO for the 14 approved petitions across the four compliance years was 740 million (RIN) gallons, a substantial amount. The six petitions approved for 2021-2022 are not relevant to our projections of D4 balance sheets over 2023-2027 and can be ignored. However, the 10 petitions approved for 2023-2024 representing 510 million gallons will have a material impact on the balances, and therefore, we include them in our updated estimates. We follow the procedures discussed in our November 5th article for including the additional SRE volumes. In addition, the larger total of SREs over 2023-2025 raises the issue of updating volumes for the 100 percent and 50 percent reallocation scenarios. We assume that the EPA will follow the same reallocation procedures for the most recently awarded SREs as those previously granted.
The updated D4 RIN balance sheets shown in Table 1 reveal an even more dramatic shift in D4 RIN market fundamentals between 2023-2025 and 2026-2027 than in our original projections.
...
Implications
EPA decisions in recent months regarding the implementation of the U.S. Renewable Fuel Standard (RFS) will likely have far-reaching impacts on biomass-based diesel market dynamics. Of central importance to the potential impacts on physical production and feedstock use is the EPA proposal to lower the RIN value by 50 percent for biofuel produced domestically with foreign feedstock or imported biofuel. In this article, we project biomass-based diesel production and feedstock use for 2026-2027 under different scenarios regarding the impact of the half RIN proposal. Our projections indicate that FAME biodiesel production will need to increase by an average of 39 percent over 2026-2027 compared to the 2023-2025 average, while renewable diesel production must rise by 44 percent over the same period. Capacity utilization jumps from an average of 71 percent over 2023-2025 to rates approaching or even exceeding 100 percent by 2027 under the half-RIN scenarios. This would mark a dramatic reversal from the recent period of relative oversupply and substantial D4 RIN bank accumulation. Our analysis also projects that domestic feedstock use will need to increase by an average of 20 billion pounds annually over 2026-2027 compared to the 2023-2025 average—an eye-popping 88 percent jump that represents one-quarter of the entire U.S. vegetable oil, animal fat, and grease supply available in the 2023-24 marketing year. Market participants should anticipate a period of elevated price volatility for D4 RINs, biomass-based diesel, and feedstock as the market adjusts to these tighter fundamentals. It should also be noted that the EPA policies analyzed in this article have not been finalized. In particular, much depends on whether the half-RIN proposal is included in the final rulemaking for 2026-2027.
References
Bukowski, M., B. Swearingen, and T. Hubbs. “Special Article: Estimating Biomass-Based Diesel Feedstock Availability in Marketing Years 2018/19-2023/24.” Oil Crops Outlook, U.S. Department of Agriculture, Economic Research Service, Situation and Outlook Report, February 2025. https://ers.usda.gov/sites/default/files/_laserfiche/outlooks/110935/OCS-25b.pdf?v=96817
Gerveni, M., T. Hubbs and S. Irwin. "Biodiesel and Renewable Diesel: What’s the Difference?" farmdoc daily (13):22, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, February 8, 2023.
Gerveni, M., T. Hubbs and S.H. Irwin. “Storage Dynamics in the RIN Market: Taking It to the Bank.” Working paper, Department of Agricultural and Consumer Economics, University of Illinois-Urbana-Champaign, September 2025.
Hubbs, T. and S. Irwin. "Rewriting the RFS Playbook: The Impact of Revised RVOs on Projected D4 Biomass-Based Diesel RIN Generation for 2026-2027." farmdoc daily (15):204, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, November 5, 2025.
Hubbs, T. and S. Irwin. "Rewriting the RFS Playbook: The Impact of Recent EPA Decisions on 2023-2027 RVOs for Biomass-Based Diesel." farmdoc daily (15):199, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, October 29, 2025. READ MORE
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