US Oil, Farm Groups Push EPA for Steep Biofuel Mandate

April 02, 2025

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by Cole Martin (Argus Media) The American Petroleum Institute and biofuel-supporting groups told Environmental Protection Agency (EPA) officials at a meeting today (April 1, 2025) that the agency should sharply raise advanced biofuel blend mandates for 2026.

The coalition told EPA that it supported a biomass-based diesel mandate next year of 5.25bn USG, up from 3.35bn USG this year, and a broader advanced biofuel mandate, including the cellulosic category, at 10bn Renewable Identification Number (RIN) credits, up from 7.33bn RINs this year, according to three different groups that attended the meeting. Both mandates would be record highs for the Renewable Fuel Standard (RFS) program.

Soybean oil futures and RIN credit prices have risen sharply over the past week on optimism that oil and biofuel interests were working to coordinate volume mandate requests for consideration by President Donald Trump's administration.

The coalition is also pushing the agency to set a total conventional volume requirement at 25bn RINs, which would keep an implied mandate for corn ethanol flat at 15bn USG. Ethanol groups had previously eyed a mandate even higher, but limits on the amount of ethanol that can be blended into gasoline make much more-stringent requirements a tough sell to oil refiners.

The coalition provided no specific request for the cellulosic biofuel subcategory, where most credit generation comes from biogas. Credits in that category are more expensive, but price concerns have been less potent recently given an EPA proposal to lower previously set cellulosic obligations, signaling that future volume requirements can be cut, too.

EPA is aiming to finalize new RFS volume mandates by the end of the year if not earlier, people familiar with the administration's thinking have said. EPA officials signaled at the meeting they were working urgently on the rulemaking.

"The agency is intent on getting the RFS program back on the statutory timeline for issuing renewable volume obligation rules," EPA said, declining to comment further on its plans for the rule.

The RFS program requires oil refiners and importers to blend biofuels into the conventional fuel supply or buy credits from those who do. Under the program's unique nesting structure, credits from blending lower-carbon biofuels can be used to meet obligations for other program categories. One gallon of corn ethanol generates 1 RIN, but more energy-dense fuels earn more RIN credits per gallon.

Some disagreements persist

While groups at the meeting were aligned around high-level mandates, how administration officials and courts treat small refinery requests for exemptions from RFS requirements could undercut those targets. Groups present were broadly aligned on asking EPA not to grant widespread exemptions, though there is still disagreement in the industry about how best to account for exempted volumes when deciding requirements for other refiners.

Groups present at the meeting today included the American Petroleum Institute and representatives of biofuel producers and crop feedstock suppliers. Some groups that previously engaged with the coalition's efforts to project unity to the Trump administration were not present. And some groups more historically skeptical of the RFS and more supportive of small refinery exemptions — including the American Fuel and Petrochemical Manufacturers — have not been closely involved.

Fuel marketer groups notably did not attend the meeting after a representative sparred with others in the coalition at an American Petroleum Institute meeting last month. Some retail groups, including the National Association of Convenience Stores and the National Association of Truck Stop Operators, instead sent a letter to EPA today arguing that the groups pushing steep volumes are discounting potential headwinds to the sector from new tax credit policy.

Some of the groups advocating for higher biofuel volumes have pointed to high production capacity and feedstock availability, but have preferred to ignore thornier issues like tax credits, lobbyists say.

"An overly aggressive increase in advanced biofuel blending mandates under the RFS will be punitive for American consumers" without extending a long-running $1/USG tax credit for biomass-based diesel blenders, the retailers' letter said. That incentive expired last year and was replaced by the Inflation Reduction Act's "45Z" credit, which offers subsidies to producers instead of blenders and throttles benefits based on carbon intensity. Generally lower credit values for biomass-based diesel — coupled with the US government's delays setting final regulations on qualifying for the credit — have spurred a sharp drop in biofuel production to start the year.

Without a blenders credit, the RFS volume mandates pushed by some groups could increase retail diesel prices by 30¢/USG, the fuel marketers estimate, a potential political headache for a president that ran on curbing consumer costs. Other biofuel groups say that extending the credit would be an uphill battle this year, with some lawmakers and lobbyists instead focused on legislatively tweaking the 45Z incentive's rules to benefit crop feedstocks instead of reverting wholesale to the prior tax policy. READ MORE

Related articles

US EPA's upcoming proposal on biofuel blending mandates to cover two years, sources say (Reuters)
Fuel Groups Jockey for RFS Position -- Fuel Interests Set to Meet at EPA on Future of Renewable Fuel Standard (DTN Progressive Farmer)
US oil and biofuel coalition meets with EPA to seek biomass diesel boost (Reuters)
Biofuels Could Face Market Disruption Without Blenders’ Credit: NACS, other organizations caution EPA that, without the credit, diesel prices could be impacted by high RFS obligations. (Convenience.org)
Some Fuels Groups Agree On RFS Volumes, Sparing Trump EPA From Battle (Inside EPA)
Renewable Fuels Association calls for continued growth through RVO’s (Brownfield Ag News)
Small Refiners Resist RFS Volume Hike, Oil Sector Compact With Biofuels (Inside EPA)
Slowing biofuel demand weighs on veg oil markets (Agri-Pulse)

Excerpt from Reuters: The U.S. Environmental Protection Agency plans to release a proposal on biofuel blending mandates that covers two years worth of mandates, instead of a proposal that covers three years, two sources familiar with the matter told Reuters on Tuesday. READ MORE

Excerpt from DTN Progressive Farmer: According to statute, the EPA was required to finalize 2026 volumes by November 2024, but the Biden administration pushed it back by one year, leading to a lawsuit filed in federal court by Clean Fuels Alliance America and Growth Energy. Read more about that here: https://www.dtnpf.com/….

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The groups provided a chart with a list of 22 biomass-based diesel plants that have closed, converted production to other products or gone idle leading up to and after the end of the $1 biodiesel tax credit.

"At least nine facilities in the U.S. have confirmed they will be shutting down or idling production this year until further notice," the letter said.

"Collectively these facilities represent nearly 750 million gallons per year of biodiesel/renewable diesel capacity (about 15% of the market)."

INDUSTRY WARNINGS

Paul Winters, director of public affairs and federal communications for Clean Fuels Alliance America, said the biomass-based diesel industry warned federal officials for months that the tax policy uncertainty would harm the industry.

"We tried to make clear to Treasury that producers and feedstock providers needed to know the rules at least three months before the start of the year," Winters told DTN.

"They negotiate feedstock purchases and fuel sales contracts a minimum of a quarter year in advance. So, it's no surprise that our industry started the year without those contracts in place. And many producers had to shut down or slow down."

With the January guidance on calculating the 45Z credit, he said some companies have enough information to move forward with contracts. Read more about that here: https://www.dtnpf.com/….

"There is existing guidance on transferring the credit to others, on the registration requirements and on the form to file to claim the credit," Winters said.

"Others do not have enough confidence in the guidance or clarity on certain aspects, like qualifying sales or when/how to file. So, individual companies are making case-by-case decisions on restarting production."

The groups told Zeldin in the letter that as a result of facility closures, total renewable diesel and biodiesel volumes are down by about 59% since the end of 2024 and total volumes are down by about 50%, year-over-year.

Domestic renewable diesel volumes are down by nearly 52% since the end of 2024 and 34%, year-over-year, the letter said. Domestic biodiesel volumes are down by about 58% since the end of 2024 and domestic biodiesel volumes are down by nearly 42% year-over-year.

"While this state of affairs may help certain domestic biofuel producers, it hurts retailers, trucking companies, and consumers," the letter said. READ MORE

Excerpt from Convenience.org: If the U.S. Environmental Protection Agency (EPA) sets aggressive renewable volume obligations under the Renewable Fuel Standard (RFS) without a Congressional extension of the “Section 40A” biodiesel blenders’ tax credit, diesel prices could be significantly impacted, said NACS; NATSO, representing truck stops and travel centers; and SIGMA: America’s Leading Fuel Marketers.

In a letter to EPA Administrator Lee Zeldin, the associations, who together represent more than 90% of fuel sold at retail, noted, “Our members have grave concerns that setting volumes for total advanced biofuel at levels that the market is unable to economically absorb will result in steep increases in [RIN] prices and, by extension, in the retail price of diesel. Unrealistic mandates, particularly when they are not paired with the relief that the [blenders’ tax credit] could help provide, would be destructive of the market and impose palpable inflationary pressures that will hit American consumers directly in their wallets every time they buy virtually any good in the nation.”

The letter noted that fuel retailers support policies that enhance energy independence and support abundant, stable energy sources and that biofuels represent a key component of ensuring a stable fuel supply. Extending the $1 per gallon biodiesel blenders’ tax credit would restore certainty in the biofuels market, which has entered a production crisis, threatening supplies.

The expiration of the blenders’ tax credit at the end of 2024, coupled with an incomplete and ineffective tax framework created under the new “Section 45Z” clean fuel producers’ tax credit, has decimated biofuels supply chains, the associations noted. Many biofuel production facilities, particularly biodiesel plants, have scaled back or are shutting down entirely.

EPA data shows that total renewable diesel and biodiesel volumes are down by 58.8% since the Biodiesel Tax Credit expired at the end of 2024. Total volumes have declined by 50.2% year over year.

More than 20 U.S. biofuel facilities — representing almost 15% of the biofuels market — will shutter or idle production in 2025, according to public data, reducing biodiesel and renewable diesel capacity by nearly 750 million gallons, per year. Iowa, the leader in biodiesel production, could shutter most of its 10 biodiesel production facilities this year, removing nearly 20% of U.S. biodiesel from the market.

“In absence of an extension of the [blenders’ credit], EPA should remain wary of these major disruptions as it develops the forthcoming renewable volume obligations,” the associations said, adding that they are eager to work with EPA to advance consumer-oriented fuel policies that support the Administration’s agenda and the American consumer. READ MORE

Excerpt from Brownfield Ag News: The Renewable Fuels Association is calling for the continued growth of the Renewable Fuel Standard.

CEO Geoff Cooper says he hopes to see that as the EPA finalizes renewable volume obligations for 2026 and beyond.

“That’s what the statute calls for (and) that’s what Congress intended when they passed the law establishing the RFS in 2005 and then passed the law expanding it in 2007, the whole thing was meant to drive long-term growth well into the future for different types of renewable fuels.”

He tells Brownfield that means a minimum of 15 billion gallons of conventional biofuel like corn ethanol.

“We think there’s a strong case to be made that that number could and should be higher than that. There’s nothing in the law that constrains EPA to 15 billion gallons for conventional renewable fuels.”

Cooper expects an announcement from EPA in the next two months and says hopefully it includes RVO’s for the next three years to provide certainty to the renewable fuels industry. READ MORE