Biofuels outlook clarified with RVO boost

Jacqui Fatka

April 8, 2026

Key Points

• The newly announced renewable volume obligations set biomass-based diesel mandate over 60% above last year’s levels, a record high.
• While less than the industry wanted, EPA reallocated small refinery exemptions levels at 70% while establishing certainty in future decisions.
• The EPA issued E15 summertime waivers starting May 1, but legislative action on a permanent solution remains stalled.

The wait is over for the renewable volume obligations of the Renewable Fuel Standard, clearing an outlook that had been clouded by uncertainty the last several months. On March 27, the White House announced RVOs for 2026 and 2027 at the highest levels in the program’s 20-year history, intended to increase the use of domestic biofuels. Biomass-based diesel was the biggest winner with a 62% higher mandated level, although nuances of the final rule will limit the upside potential for domestic feedstocks, particularly soy oil.

Doubt over the final RVO for biomass-based diesel led U.S. biodiesel production to decline by one-third in 2025, compared to 2024. Industry stakeholders previously advocated for at least a 5.25 billion-gallon BBD level for 2026. The Environmental Protection Agency delivered a final rule of 5.4 billion gallons in 2026 and 5.7 billion gallons in 2027. The final volume requirements reflect the projected growth in the domestic production capacity and supply of feedstocks, primarily soybean oil, with smaller projected increases in other feedstocks including used cooking oil (UCO) and animal fats, EPA said. The finalization of the rule as the first quarter closes should provide clarity and the needed push to encourage blenders to quickly ramp up production for the remainder of the year to meet the ambitious blending goals. As shown in the chart below, when estimating the projected supply of renewable fuel, the industry is well-positioned to meet the higher RVO levels.

EPA adjusted its RVO to account for a 70% reallocation of previous small refinery exemptions, less than the biofuels industry ask of 100%. EPA’s rule also contains a mechanism to account for projected small refinery exemptions in 2026 and 2027. This guarantees the required volumes are met for the next two years, eliminating the ongoing unknown impact of SRE on total mandated volumes and subsequent demand.

The agency delayed implementation of a 50% reduction in the renewable identification number for any foreign feedstocks or foreign fuel until 2028 to give refiners time to prepare for the change. Each physical gallon of renewable diesel or biodiesel produced or imported generates 1.6 to 1.7 RINs, and the proposal would grant only half RIN values to be used by obligated parties to meet annual compliance obligations. This provision has the potential to greatly incentivize production of domestic feedstocks, notably soyoil, and lay a strong foundation for future growth and investment in the crush sector.

Industry still pushing for year-round E15

On the ethanol side, EPA issued a temporary emergency fuel waiver beginning May 1 to allow nationwide sales of E15, gasoline blended with 15% ethanol, to continue through the summer months. However, Congress has been unable to advance legislation providing a permanent fix to allow for E15 sales year-round.

Although President Donald Trump and Secretary of Agriculture Brooke Rollins have voiced support for E15, Congress holds the keys to unlocking the permanent solution. E15 traditionally costs consumers 10 to 30 cents per gallon less at the pump, and those cost savings have widened in some areas with the recent increase in gasoline prices following the Iran conflict. During a time of highly volatile fuel prices and instability in global crude oil markets, E15 offers a way to extend domestic fuel supplies and improve gasoline affordability. Biofuel supporters have urged for inclusion of E15 legislation within any legislative vehicles, including a potential bill to fund the war in Iran or the farm bill.