US Refiners Face RIN Crunch as Biofuel Mandate Outpaces Supply

by Janet McGurty (S&P Global) D4 RIN generation hits 43% of mandate by midyear; Refiners may cut gasoline supply or draw RIN banks; Zero biodiesel imports compound compliance pressure

US refiners are confronting a potential fuel production bottleneck in the second half of 2026 as surging biofuel blending mandates collide with insufficient Renewable Identification Number availability, threatening to constrain gasoline and diesel output if compliance gaps widen further.

"If the RIN bank is not large enough, and refiners cannot acquire enough RINs, they could be forced to throttle gasoline supply," PBF Energy CEO Matt Lucey said on the company's second-quarter 2026 earnings call. "Obviously, that would be a disaster in today's marketplace."

The American Fuel and Petrochemical Manufacturers warned that Renewable Fuel Standard mandates could cost refiners over $106 billion over two years at current RIN price levels, drawing down the RIN bank at an unsustainable pace.

The Environmental Protection Agency's final 2026 Renewable Volume Obligation set the biomass-based diesel mandate at 8.86 billion RINs -- up 65% from 2025 levels -- while simultaneously stripping RIN credits from imported volumes.

But domestic production has failed to keep pace. By midyear, D4 RIN generation reached only 3.9 billion RINs, or 43% of the full-year obligation, according to S&P Global Energy Horizons analysts.

US renewable diesel production hit an all-time high of 245,000 barrels/day in May, but demand ran 70,000 b/d below that figure, with the California market saturated and tank space constrained.

Biodiesel imports, which historically supplemented domestic supply, have effectively ceased; multiple months in the first half of 2026 recorded zero imports, according to EPA RIN generation data and US Customs figures.

The 45Z Clean Fuels Production Credit, which replaced the Blender's Tax Credit in January 2025, explicitly restricts eligible feedstocks to those sourced from the US, Mexico and Canada, effectively locking out Chinese used cooking oil and tilting feedstock flows toward domestic soybean oil, tallow and qualifying UCO imports.

This policy shift has reinforced the domestic production tilt but has not yet generated sufficient volumes to close the compliance gap.

The compliance gap in D4 is a key commercial driver: producers with domestic feedstock supply chains are best positioned to capture elevated RIN values, while obligated parties face increasing pressure to source additional biomass-based diesel volumes or draw on banked RINs to meet obligations. READ MORE

Excerpt from OPIS: Valero Energy expects the Renewable Identification Number (RIN) credit bank to be depleted between the end of the year and sometime in the middle of 2027, a scenario the company said would likely keep biomass-based diesel D4 RIN prices elevated as biomass-based diesel production falls short of compliance obligations.

During Valero’s second-quarter earnings call on Thursday, Eric Honeyman, senior vice president of renewable operations and low-carbon fuels, said the company views the RIN market as short despite relatively strong RIN generation reported in June from the U.S. Environmental Protection Agency (EPA).

“Everyone is looking at the June numbers, thinking, ‘Wow, those are exceptionally higher. We should have no problem meeting [the RVO].’ Maybe,” Honeyman said.

“What we see is you still had a lot of players that did not produce D4 [RINs] in Q1 waiting on the RVO release,” Honeyman added. “So, 2026 in particular is going to be a low production year versus the obligation, which means you will draw the [RIN] bank. We see that as structurally keeping the D4 RIN high.”

Valero Chairman, President and Chief Executive Officer Lane Riggs said the company is closely monitoring if or when the RIN bank could be exhausted, adding that the market has little precedent for how the Renewable Fuel Standard (RFS) would function if sufficient RINs were no longer available to meet
current and future compliance obligations.

“I don’t think anybody knows what happens if it goes infeasible,” Riggs said. “That is a concern.”

Honeyman said the pace at which foreign biomass-based diesel imports enter the U.S. market could play an important role in determining whether supply is sufficient to meet the EPA’s 2026 and 2027 Renewable Volume Obligations (RVOs), but the company believes imports face greater hurdles now than under previous federal incentive programs.

Historically, imports helped fill any shortfalls in domestic renewable diesel and biodiesel when the now-expired $1/gal Blender’s Tax Credit (BTC) was available because imported volumes qualified for the credit.

The BTC expired at the end of 2024 and was replaced in 2025 by the Section 45Z Clean Fuel Production Credit, which discourages imported fuels in favor of incentivizing domestically produced biomass-based diesel.

“What’s different now with this RVO and RIN driver is you have to be registered to generate RINs, and so a lot of these foreign importers are not registered to generate RINs,” Honeyman said. “That will take an administrative step to do that.”

He added that recently announced tariffs further raise the cost of imported renewable fuels, making them less competitive and slowing the pace at which imports could respond to higher RIN prices. READ MORE