News and Articles

• The EPA granted 1.76 billion RINs of small refinery exemptions for the 2025 compliance year, providing greater clarity on US renewable fuel requirements.
• Actual exemptions were 770 million RINs above the level previously assumed, and the EPA plans to propose reallocating this additional volume into 2026 and 2027 obligations.
• Any additional allocation to the biomass-based diesel category could raise biodiesel and renewable diesel production requirements and strengthen feedstock demand.
• Current standards already imply that biodiesel and renewable diesel production and use will need to increase by more than 60% from 2025 levels.
• Higher production requirements are expected to increase competition for soybean oil, used cooking oil, canola oil, and animal fats, making feedstock availability increasingly important for biodiesel producers.

US biodiesel producers have received greater clarity on future renewable fuel demand after the Environmental Protection Agency settled the size of its small refinery exemption package for the 2025 compliance year. The agency granted 1.76 billion Renewable Identification Numbers, or RINs, in exemptions and indicated that additional exempted volumes could be added back into renewable fuel obligations for 2026 and 2027.

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The decision matters to biodiesel producers because small refinery exemptions reduce the number of renewable fuel credits that exempt refiners must retire. Larger exemptions can weaken RIN demand, which can affect the economic support available to biodiesel and renewable diesel producers. The EPA had previously assumed 990 million RINs of exemptions, leaving actual exemptions 770 million RINs above its earlier projection.

The agency plans to propose reallocating 100% of that additional 770 million RINs across the 2026 and 2027 Renewable Volume Obligations. The proposal has not yet been finalized, and the allocation between the two years and different renewable fuel categories remains undecided. The share assigned to biomass-based diesel will be particularly important for biodiesel producers because it would translate more directly into demand for biodiesel and renewable diesel.

The existing federal standards already require a sharp increase in biomass-based diesel use. Regulatory estimates indicate that biodiesel and renewable diesel production and consumption will need to rise by more than 60% from 2025 levels to meet current requirements. This expansion is increasing attention on the availability of the fats and oils needed by fuel producers.

Soybean oil is expected to carry a large part of the additional feedstock requirement. US soybean oil use for biofuels is forecast to rise 33.2% to 18.42 billion pounds in 2026/27. Used cooking oil demand for biofuels is forecast to increase 35.4% to 6.75 billion pounds, with imports expected to provide 59% of available supply. Canola oil biofuel use is projected to rise 72% to 6.16 billion pounds, with imports accounting for 81% of projected supply.

For biodiesel procurement teams, the policy direction raises the importance of securing eligible feedstocks ahead of stronger production requirements. Availability, origin, carbon intensity, and regulatory eligibility can influence sourcing decisions alongside feedstock cost. Greater biodiesel output could intensify competition for soybean oil, used cooking oil, canola oil, and animal fats, making supplier coverage and import availability important factors in purchasing plans.