Ethanol Blog

LINCOLN, Neb. (DTN) -- Biofuels groups testifying in a public hearing on Tuesday on the Renewable Fuel Standard volumes proposal could hardly contain their excitement about what they say is one of the strongest-ever RFS proposals for 2026-2027 volumes.

All the while, the groups expressed concern about how the U.S. Environmental Protection Agency will address a backlog of more than 180 small-refinery exemptions still pending from previous years.

Biofuels interests told the agency they supported the commitment to account for prospective SREs in the final rule and to reallocate gallons exempted.

"This RFS proposal is the most exciting since the RFS was expanded in 2007," Iowa Renewable Fuels Association Executive Director Monte Shaw told the EPA.

"I cannot overstate the optimism it has caused in rural America at a time when farm income has plummeted and talk of tariffs triggers uncertainty. Finalizing the proposed renewable fuels blending levels will provide the right boost at the right time for our farmers. It will enhance American energy dominance, lower prices for consumers and improve the environment. IRFA urges the EPA to maintain the robust RFS levels in the final rule."

When it comes to RFS volumes and the effect SREs can have, Shaw said "at the end of the day, 15 billion gallons needs to mean 15 billion gallons for conventional renewable fuels like ethanol. And 24 billion gallons must mean 24 billion gallons for total RFS volumes. SREs should be few and far between."

Shaw said the agency could reallocate gallons lost to any exemptions.

"The optimism around the RFS is real today and it would be a mistake to pull the rug out from under one of the only bright spots in the current ag economy," he said.

Shaw also called on the EPA to unleash E15 access by eliminating regulations.

"EPA needs to reboot the effort begun during President Trump's first term to remove outdated regulations limiting E15 sales," Shaw said.

"E15 should be allowed in all fueling infrastructure from the storage tank through the nozzle. Requiring retailers to spend thousands of dollars to replace perfectly compatible equipment serves only to slow down the growth of consumer access to E15."

Growth Energy CEO Emily Skor said during the hearing that "strong" renewable volume obligations will play a key role in delivering on President Trump's vision for U.S. "energy dominance and rural prosperity."

"If finalized, these RVOs would unlock investments, create jobs and support growth in rural America by expanding our country's renewable fuel production and use," she said.

"By setting conventional biofuel blending volumes at 15 billion gallons for two years, this proposal will create the kind of certainty that spurs innovation and truly unleashes American energy dominance. This is the strongest RFS proposal we've ever seen, with the highest volumes ever, showing this administration's commitment to American biofuel producers and the farmers that depend on them."

Skor joined other biofuels interests in urging the EPA to make it clear that small-refinery exemptions will not be "granted recklessly" and that any gallons lost will be accounted for in the market.

"Only with these pieces in place can this proposal truly deliver the game-changing impact the president wants it to have and that the nation's biofuel producers and rural communities are counting on," Skor said.

Clean Fuels Alliance America CEO Donnell Rehagen said the proposed bump in biomass-based diesel volumes have already had a positive effect on the markets.

"Our industry has made substantial investments over the past several years in both biofuel production, feedstock supply, and distribution infrastructure," he said during the virtual hearing.

"Domestic production of biodiesel and renewable diesel has doubled since 2020 and continues to grow. We supplied more than 5 billion gallons of biodiesel, renewable diesel and SAF (sustainable aviation fuel) to the U.S. market in 2024 and we are poised to deliver more in 2026. We are pleased that since the proposed rule came out the markets have reacted in a positive fashion. However, uncertainty around small-refinery exemptions still hangs over the industry. We ask that you sustain the volumes as proposed to ensure that our capacity is fully utilized."

Brian Jennings, CEO of the American Coalition for Ethanol, said while his group supports EPA's proposal, he encouraged the agency to consider using its statutory authority to exceed the 15-billion-gallon conventional biofuel threshold.

Jennings said that would help offset the potential impact of lost export markets and ensure U.S. ethanol producers are not displaced by surplus renewable identification numbers, or RINs, from other categories.

Jennings highlighted ACE's ongoing efforts to establish the link between low-carbon farming practices and the 45Z Clean Fuel Production tax credit recently extended by Congress.

Jennings emphasized the importance of rewarding farmers for implementing practices that reduce the carbon intensity of ethanol.

"In partnership with USDA, DOE, 13 ethanol companies and hundreds of farmers, ACE is currently leading a project to unlock new markets and tax credits, such as 45Z, based on low-carbon farming," Jennings said.

Renewable Fuels Association President and CEO Geoff Cooper said the proposal was "an important step toward achieving President Trump's vision for lower gas prices, a stronger agriculture industry, and American energy dominance."

While the RFA applauded EPA's decision to prospectively reallocate any renewable fuel volumes lost to small-refinery exemptions in the final rule, Cooper cautioned that the EPA must be "extremely judicious" in determining whether any refiners have truly suffered, or will suffer, "disproportionate economic hardship" related to compliance with the Renewable Fuel Standard, adding that "it is critically important that EPA accurately estimate exempted volumes in the final rule to ensure that the volume requirements that are actually implemented in 2026 and 2027 match those that are published in the rule."

Cooper also said the RFA "strongly supports" EPA's proposed 50% reduction in RINs generated for import-based renewable fuels and fully agrees that there are "reduced economic, energy security, and environmental benefits" provided by imported renewable fuels.

He said the enhanced recordkeeping and reporting procedures in the proposal, however, are not needed for corn-based ethanol given that the U.S. does not import corn ethanol and corn imports make up just one 10th of 1% of the U.S. corn supply.

Todd Neeley can be reached at todd.neeley@dtn.com

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