The U.S. Environmental Protection Agency has granted 29 small refinery exemptions from 2025 Renewable Fuel Standard blending requirements while proposing to restore the renewable fuel volume associated with the exemptions through future obligations.

Of 34 pending exemption petitions, EPA granted full exemptions to 18 refineries and partial, 50% exemptions to 11. The agency denied three petitions and determined two were ineligible. The decisions amount to approximately 1.76 billion Renewable Identification Numbers, or RINs, which are credits used to demonstrate compliance with the RFS.

EPA said it will propose reallocating 100% of the difference between projected and actual exempted volumes into the 2026 and 2027 Renewable Volume Obligations. The agency plans to issue the proposal before the end of October 2026.

Biofuel Industry Responds

The Renewable Fuels Association expressed concern about the number of exemptions but said the proposed reallocation could help limit the impact on renewable fuel demand.

RFA President and CEO Geoff Cooper said most of the exemptions were unjustified but that reallocating the associated renewable fuel volume creates a path toward preventing a net loss in renewable fuel demand.

Cooper also pointed to the price advantage of ethanol. He said ethanol with a RIN attached is selling for about $2 per gallon wholesale, compared with $3.08 per gallon for gasoline.

The RFA has also called for changes to the small refinery exemption program, arguing that exemptions have created uncertainty for the RFS and renewable fuel markets.

The organization said June polling conducted by Morning Consult found that more than three-quarters of respondents with an opinion favor requiring oil companies to meet their renewable fuel blending requirements. Less than one-quarter favored allowing oil companies to avoid those requirements.

Corn Growers Cite Market Impact

The National Corn Growers Association also expressed concern about the number of exemptions while supporting EPA's plan to reallocate the associated RINs.

NCGA President Jed Bower said the reallocation is important to protecting farmers, biofuel producers and consumers.

The organization said maintaining strong markets for agricultural products, particularly corn ethanol, is important as drivers seek affordable fuel. NCGA also said recent experience indicates that SREs issued at this volume do not reduce gasoline prices.

NCGA said it will work with EPA and administration officials as the exemptions and reallocation plans are implemented.

Industry Seeks Protection for Renewable Fuel Demand

The RFA said agriculture and biofuel groups had urged policymakers to address the potential impact of the exemptions before EPA's announcement. The organization also credited lawmakers and administration officials with raising concerns about the effect of the exemptions on farmers, renewable fuel producers and consumers.

EPA's actions come as the renewable fuel industry continues to push for consistent enforcement of the RFS and greater use of domestically produced biofuels.

The proposed reallocation of the exempted volumes into future Renewable Volume Obligations is intended to offset the impact of the 2025 exemptions, but industry groups say implementation will be important to maintaining renewable fuel demand.

Sources: 

Renewable Fuels Association, "RFA: Refinery Exemptions ‘Unjustified,’ But Proposed Reallocation Approach Offers Encouragement"

National Corn Growers Association, "NCGA Responds to EPA Decision on Biofuel Credits"