The Environmental Protection Agency took three key actions in recent months:

• The proposed renewable volume obligations, or RVOs, for 2026 and 2027 were released in June
• A comprehensive rulemaking on small refinery exemptions granted between 2018 and 2024, released in July
• The reallocation policy framework for small refinery exemptions, which was published in September. 

The Farmdoc team at the University of Illinois says that, when examined individually, each decision represents a meaningful policy development. However, when analyzed collectively through the lens of biomass-based diesel RVOs, their combined impact appears to create conditions for a dramatic increase in domestic biomass-based diesel production. Todd Hubbs, an assistant professor of crop marketing at Oklahoma State University, says the end result will be all about how the Small Refinery Exemptions are reallocated.

“Well, it depends on whether they do a 100 percent or 50 percent reallocation, but we think they’re going to do one or the other. They haven’t finalized it yet, but it is a really strong growth in biomass-based diesel inside the RFS, the renewable volume obligations. If we’re at 5.5 billion RIN gallons during 2025, you know, in 2026, we could be anywhere from 7.23 to 7.34, depending on how the reallocation goes with RIN gallons inside the biomass-based diesel set. So, it’s a pretty good amount of growth and somewhat strong for our soybean oil and other vegetable oil and feedstocks that go into biomass-based diesel.”

So, the combined effect of higher Renewable Volume Obligations (RVOs), tighter restrictions on small refinery exemptions (SREs), and a mandatory reallocation mechanism is set to increase the required volume of biomass-based diesel for calendar years 2026 and 2027. Market analysis suggests these revised mandates will represent about a 50 percent increase over the current three-year period.