27/03/26
US mandates record-high biofuel use: Update 2
Updates with details from final regulatory text New York, 27 March (Argus) — The
US will require record-high biofuel use over the next two years, boosting
soybean farmers and alternative diesel producers at the expense of oil refiners
that warned of higher pump prices. Oil refiners will have to bring billions more
gallons of biodiesel and renewable diesel to market in 2026 and 2027, according
to new blend requirements released by President Donald Trump's administration
Friday. The mandates for biomass-based diesel this year alone are more than 60pc
above targets in the category last year, the biggest annual step change in
program history. The requirements come as Trump and Republicans in Congress see
more support for biofuels as one way to help farmers hurt by trade wars and
rising input costs. They also come at the same time as war in the Middle East
has pushed up the cost of oil products, raising interest in alternatives like
biofuels. Requiring "the highest volumes of renewable fuels in history" will
create rural jobs and "massively increase our nation's energy supply", Trump
said at a White House event. The Environmental Protection Agency (EPA) requires
oil refiners and importers to annually blend different types of biofuels or buy
Renewable Identification Number (RIN) credits from those that do. Traders
expecting high quotas had already boosted the price of RINs — and key renewable
diesel inputs like soybean oil — to multiyear highs this week. Friday's final
rule includes a record-high mandate of 26.81bn RINs from total renewable fuel
blending in 2026 and 27.02bn RINs in 2027, though fewer RINs per gallon next
year for some fuels mean those future requirements are even more ambitious than
they first appear. EPA sets total blend requirements and requires that a portion
come from lower-carbon "advanced" biofuel types including biomass-based diesel.
A gallon of corn ethanol generates one RIN, while more energy-dense fuels like
renewable diesel earn more. Other updates show the Trump administration siding
clearly with farmers over refiners. Larger oil companies, for instance, will
have to blend more biofuels to offset the demand hit from recently generous
program exemptions for some small refining rivals. Spread over the next two
years, the added mandate of more than 2bn RINs equals around 70pc of biofuel
volumes expected to be exempted from 2023-2025 blend quotas, higher than other
options EPA considered. The administration did punt an earlier plan to penalize
imports, which would have been one of the most substantial and legally contested
reforms in program history. While the final rule includes few more details, EPA
expects to implement some version of that provision — which could mean foreign
biofuels and feedstocks receive half the RINs as domestic product — starting in
2028. Farm groups have pushed regulators to do more to restrict inputs that
compete with US crops, including recycled cooking oil that major renewable
diesel plants bring in from countries like China. Refiners had lobbied the
administration this month to shift course, warning that higher mandates would
spill into retail fuel prices already rising because of war in the Middle East.
With affordability concerns top of mind for voters ahead of this year's midterm
elections, the possibility of higher food and fuel prices presents political
risk for Republicans. "It's baffling, with fuel prices already rising due to the
conflict in Iran, that EPA is finalizing a rule that will make things far worse
for consumers", said Chet Thompson, president of the American Fuel &
Petrochemical Manufacturers, a group usually on board with Trump's energy
policy. The mandates are certain to draw legal challenges, potentially from
refiners or environmental groups. But as courts debate the details, the quotas
are likely to support continued growth in not just US biofuel production but
feedstock processing as well. Crop trading giants like Bunge and Cargill have
invested heavily in new soybean and canola crush facilities, hoping to supply
more vegetable oils to biofuel plants. Biomass-based diesel wins more than other
fuels While the mandates will also support production margins for other
biofuels, domestic demand for corn ethanol — the most widely used biofuel in the
US — depends more on Congress. Lawmakers have struggled for months to reach a
compromise on legislation that would permanently exempt a higher-ethanol
gasoline blend from smog rules that currently limit summertime sales. Trump said
Friday he was trusting legislative leaders to soon reach a deal. Gasoline
stations can continue supplying fuel with up to 15pc ethanol this summer, more
than the typical 10pc blend, because of temporary emergency regulations that the
Trump administration started issuing this week. But so-called "E15" is still not
sold at most US retail outlets. Renewable diesel production capacity in the US,
already at record highs and growing, has boomed in part because the biofuel has
fewer blend limits. By Cole Martin Final renewable volume obligations bn RINs
2025 2026 2027 Cellulosic biofuel 1.21 1.36 1.43 Biomass-based diesel 5.36* 9.07
9.20 Advanced biofuel 7.33 11.10 11.32 Total renewable fuel 22.33 26.81 27.02
*2025 biomass-based diesel mandate set in gallons, converted here to RINs Send
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