Rewriting the RFS Playbook: The Challenge of Meeting D4 Biomass-Based Diesel RIN Generation for 2026-2027

by Todd Hubbs and Scott Irwin (Oklahoma State University and University of Illinois/farmdoc daily) On March 27, 2026, the U.S. Environmental Protection Agency (EPA) released the final “Set 2” rule establishing Renewable Volume Obligations (RVOs) under the Renewable Fuel Standard (RFS) for 2026 and 2027. The 2026 and 2027 increases in the biomass-based diesel RVOs are unprecedented in the history of the RFS and will set the trajectory of the U.S. biomass-based diesel industry for years to come (farmdoc daily, April 16, 2026).

In our most recent article in this series (farmdoc daily, April 27, 2026), we used a detailed balance sheet approach to project the level of D4 RIN generation required to meet the final RVOs in 2026 and 2027. The headline finding was that required D4 net RIN generation must increase from 7.10 billion RIN gallons in 2025 to 11–12 billion RIN gallons in 2026 and 2027—levels that have no precedent in the history of the U.S. biomass-based diesel industry. The purpose of this article is to put that requirement into a more tangible context by examining the recent monthly pace of D4 RIN generation alongside the pace that will be needed to meet the final RVOs.

Analysis

We begin with a brief recap of the D4/D5 RIN balance sheet analysis presented in our April 27th article. The framework is the standard balance sheet identity that governs RIN markets:

Beginning RIN Bank + RIN Generation + Current Year Deficit − RVOs − Exports − Previous Year Deficit − Ending RIN Bank = 0

The challenge of meeting these required generation levels comes into sharp relief when set against the recent history of monthly D4 RIN net generation.

Two features of Figure 1 stand out. The first is the simple fact that the required monthly pace of D4 RIN net generation for 2026 and 2027 is well beyond any sustained level observed in the historical record.

The second notable feature of Figure 1 is that monthly D4 RIN net generation in early 2026 has started off well below the pace needed to meet the 2026 RVO.

It is important to recognize that our projection of the required monthly pace of D4 RIN generation for 2026 and 2027 could prove to be too high. Three factors could push the required pace below the required levels shown in Figure 1. First, the volume of small refinery exemptions (SREs) awarded by the EPA for 2026 and 2027 may turn out to be larger than the 7.55 billion gallons projected in the final Set 2 rulemaking. Because the percentage standards in the final rule are fixed from this point forward, a larger SRE volume would translate into a smaller applicable RVO in volume terms across each fuel category, including biomass-based diesel. Second, actual obligated petroleum gasoline and diesel volumes for 2026 may fall short of the EPA’s projection. This is particularly relevant given the run-up in crude oil prices associated with the Iran war, which would be expected to reduce gasoline and diesel consumption relative to the EPA’s baseline projection. Lower obligated volumes would, again through fixed percentage standards, reduce the applicable RVOs in volume terms. Third, D4 export retirements in 2026 and 2027 may turn out to be even lower than the 534 million gallons assumed in our balance sheet projection.

Even taken together, however, the cumulative effect of these three factors would only moderately reduce the required monthly pace of D4 RIN generation for 2026 and 2027. Our best assessment is that, under reasonable downside scenarios for SREs, obligated volumes, and exports, the required monthly pace would fall to no lower than roughly 850 million RIN gallons per month, compared with the average 950 million RIN gallon pace for 2026-2027 under our baseline assumptions.

Mechanically, this means that monthly generation must average nearly 1,100 million gallons for the rest of 2026 if the 2026 RVO is to be met without drawing the D4/D5 ending bank below the assumed minimum operating level or accumulating large deficits.

How will obligated parties and biomass-based diesel producers respond to this challenge? At a high level, there are three margins of adjustment.

First, biomass-based diesel producers can ramp up capacity utilization, both for FAME biodiesel and for renewable diesel, well above the 60 percent average utilization rates observed in 2023–2025.

Second, imports of biomass-based diesel and feedstocks can play a larger role than they did during the slowdown of 2025.

Third, in the event that physical production and imports fall short, obligated parties can draw down the existing D4/D5 RIN bank and incur compliance deficits that must be made up in the following year.

The relative contributions of these three margins of adjustment will shape outcomes in the D4 RIN market, in the soybean oil and other feedstock markets, and ultimately in the diesel fuel market itself. These dynamics will be the focus of the next articles in this series, beginning with a detailed look at the implications for biomass-based diesel production and capacity utilization.