Ethanol industry stakeholders are pleased with the Environmental Protection Agency (EPA) finalized Renewable Volume Obligations (RVOs) for the 2026 and 2027 compliance years under the Renewable Fuel Standard (RFS) ‘Set 2’ Rule overall, but still take issue with the 70% partial reallocation of the 2023–2025 granted small refinery exemptions (SREs).
Renewable Fuels Association President and CEO Geoff Cooper says they advocated for full reallocation of the 2023-2025 SREs, but at least the 70 percent reallocation included in the final rule is better than other options that were under consideration as low as 50 percent.
“We continue to believe small refinery exemptions are completely unjustified, and the SRE petition process—including EPA’s reliance on the Department of Energy’s ‘scoring matrix’—is fundamentally flawed,” Cooper said. “SREs distort the market, undermine fair competition, and destabilize the RFS program. And while RFA appreciates EPA’s efforts to minimize market disruptions by reallocating most of the renewable volume lost to SREs, we believe the Agency has a duty to fully restore all exempted volumes.”
American Coalition for Ethanol (ACE) CEO Brian Jennings says failing to fully account for any SREs granted risks undermining the intent of the RFS.
“The integrity of the RFS depends on ensuring volume obligations translate into real-world demand,” said Jennings. “Importantly, EPA has the authority to set volumes that require more than 15 billion gallons of conventional biofuels annually. We would encourage EPA to seriously consider higher volumes next year to account for any negative impact from SRE gallons not being fully reallocated and for potential E15 increases.”
Even the American Petroleum Institute (API) says reallocating volumes from SREs “distorts the marketplace, rewarding exempted refineries while disadvantaging the majority of refiners who are not exempted. This highlights the need for legislative reform to ensure the RFS delivers certainty, supports investment, and maintains a reliable fuel supply.”