Strong Market Signals

June 06, 2026

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by Lisa Gibson (Ethanol Producer Magazine) Record-high Renewable Volume Obligations in the RFS Set 2, lucrative 45Z Production Tax Credits, continuously growing export demand and surging oil and gas prices highlighting the need for E15: The ethanol industry is in the midst of a boom eclipsing any in recent memory.

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The Big Boom
RFS Set 2, finalized in March, effectively requires 15.7 billion gallons of conventional renewable fuel in 2026 and 2027.

“We think it is sending a very bullish, very positive signal to the marketplace to ramp up production,” Cooper (Geoff Cooper, president and CEO of the Renewable Fuels Association) says. “We’ve not only got a 15-billion-gallon-plus RVO for conventional fuels like ethanol in 2026 and 2027, but we’ve also secured reallocation of 70% of the small refinery exempted volumes from the past three years.

“And that would be the highest-ever requirement,” Cooper says. “Frankly, meeting those volumes is going to require E15.”

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In May, ethanol was selling for about $1 per gallon less than gasoline blend stock on the global market. That translates to about 30 to 40 cents per gallon at U.S. pumps.

“I think the current situation in the Middle East is really putting an exclamation point on the energy security and economic benefits of ethanol, and we’re seeing that across the globe,” Cooper says. “We’re going to be living with high gas prices for a while, regardless of when the conflict ends, and when traffic starts flowing through the Strait again.”

As of press time, the Strait of Hormuz was open to only limited traffic and the conflict in Iran, while subsiding in late May, remained ongoing.

Twenty percent of the world’s oil supply goes through the Strait of Hormuz, according to Lamberty (Ron Lamberty, chief marketing officer for the American Coalition for Ethanol). “You’ve got the rest of the world trying to supply the markets that oil went to,” he adds.

But even after the conflict settles and the Strait fully reopens, backfilling demand and catching up with the market will take weeks to months. “What we’ve seen historically is that these types of demand and supply shocks have long tails—prices go up very quickly and take much longer to come back down to pre-shock levels,” Cooper says. “But we have never seen a supply shock of this magnitude. So, I don’t think even looking at past incidents is necessarily indicative of how this is going to go.”

In response, many countries are committing to increasing their use of ethanol from reliable supply sources, including the U.S.

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Meanwhile, producers on the Trailblazer pipeline and others with carbon capture and storage strategies have started collecting 45Z Clean Production Tax Credits. Green Plains, which has three Nebraska ethanol plants on the pipeline, reported it received $55.2 million through 45Z credits in the first quarter of 2026. The credit is yet another positive marker contributing to U.S. ethanol’s boom.

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“The other thing we know is happening is virtually every facility is looking into adding capacity, through debottlenecking or modest expansions,” he says. “That capacity creep is moving forward and has really accelerated in the last six months, to the point that we think the industry will have the capacity to produce 19 billion gallons or more as soon as the end of this year, or certainly a year from now.”

Several producers are working on expansions, including: POET Bioprocessing-Shelbyville, from 98 MMgy to 193 MMgy; One Earth Energy, from 150 MMgy to 200 MMgy; The Andersons Clymers, from 140 MMgy to 170 MMgy; and Gevo North Dakota from 67 MMGy to 75 MMgy, as well as a new 75 MMgy plant adjacent to its existing facility. READ MORE

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Opinion: America’s farmers are ready to fuel the future, if Washington gets 45Z right (Messer Beaver Creek Ranch/Agri-Pulse)

Excerpt from Messer Beaver Creek Ranch/Agri-Pulse: On my farm, practices like reduced or no-till, cover crops, and enhanced fertilizer management improve my farm’s soil health and resilience, reduce my input costs and increase yields. All in all, these practices make mine and my neighbors’ operations stronger for the long haul.

Farmers need to know which practices will be included, and what reporting and recordkeeping will be required, so that the crops we plant provide the greatest value when harvested and sold as biofuel feedstocks.

Last year, the USDA released draft biofuel feedstock guidelines and a beta version of a user-friendly on-farm calculator. These tools would provide a flexible and efficient approach to recordkeeping and verification for ag production practices that start with farmers and extend through the biofuel supply chain.

USDA recently sent its final biofuel feedstocks guidelines to the White House for review. That’s one encouraging step, but now it’s time for the lead federal agencies to work together and leverage USDA’s expertise to complete the process of integrating these tools in 45Z, as Treasury committed to do earlier this year.

Not only do agricultural production practices matter for biofuels produced today, but on-farm practices are especially critical as we look to the next frontier of biofuels: sustainable aviation fuels. SAF represents one of the most promising opportunities to advance aviation and energy security while creating new markets for American crops and biorefinery manufacturing.

American innovators are at the ready to turn this promise into opportunity for America’s farmers, but we need federal policy to align with this momentum. Partnering with farmers and adding value to their crops through new biofuel markets is a key part of the business system for biofuel producers such as Gevo North Dakota and others.

By accounting for ag practices through 45Z, fuel producers can compensate farmers for sustainable ethanol feedstocks today while investing in commercial-scale production of SAF for tomorrow, unleashing the full promise of a new generation of American-grown crops. This investment will directly benefit American farming communities, like mine in North Dakota, as our products meet growing demand and create new market opportunities. Farmers will be better positioned to compete in more markets, including internationally.

The United States can lead the world in innovation and in recognizing and rewarding the benefits farmers and modern agriculture bring to U.S. biofuels and energy production, including SAF. Done right and when fully implemented, these efforts will support new jobs, strengthen our nation’s energy security and expand markets for farmers right here at home.

We’re ready to fuel the future. We just need the certainty. READ MORE