Industry Reaction Mixed on EPA’s 2025 SRE Decisions with Proposed 100% Reallocation into 2026, 2027 RVOs

Based on its analysis, the agency is exempting 1.76 billion Renewable Identification Number (RIN) credits from retirement for 29 of the 34 small refineries that petitioned for relief, representing 13.38 billion gal of gasoline and diesel exempted from 2025 RFS compliance obligations.

The agency also intends to issue a direct final rule extending the 2025 RVO compliance deadline by 30 days to Oct. 1.

“This will allow the market to appropriately account for the additional RINs,” EPA said in a release.

EPA also said it plans to propose by the end of October reallocating 100% of the difference between its projected and actual 2025 exemptions into the 2026 and 2027 Renewable Volume Obligations (RVOs).

The 1.76 billion RINs exempted are about 770 million RINs, or nearly 78%, above the roughly 990 million RINs the EPA projected for 2025 when it finalized the 2026-2027 RVO rule in late March.

The total is also about 40 million RINs below the 1.8 billion-RIN exemption figure reported in the market last week, which contributed to a selloff in RIN values.

The agency’s planned 100% reallocation of the 770 million-RIN difference would exceed the roughly 500 million-RIN adjustment that administration officials had been discussing ahead of Monday’s announcement.

When EPA finalized the 2026-2027 RVOs in March, the agency had not yet ruled on the pending 2025 SRE petitions and relied on a projection to account for expected exemptions when setting the percentage standards.

EPA projected that 4.35 billion gal of gasoline and 3.20 billion gal of diesel, or 7.55 billion gal combined, would be exempted for 2025, equating to about 990 million RINs.

The final RVOs included about 990 million RINs of SRE reallocation for 2026 and 1.04 billion RINs for 2027 as part of EPA’s decision to reallocate 70% of exempted obligations from the 2023-2025 compliance years.

The resulting total renewable fuel requirements were set at 26.81 billion RINs for 2026 and 27.02 billion RINs for 2027.

The EPA said Monday that more small refineries seeking exemptions and changes in their financial circumstances contributed to actual 2025 exemptions exceeding the agency’s earlier projection.

The proposed additional reallocation would address the difference between the 990 million RINs the EPA had initially anticipated in the 2026-2027 RVO ruling, and the 1.76 billion RINs ultimately exempted, rather than reallocating the full 1.76 billion RINs a second time.

The EPA also reissued a partial exemption for one petition for the 2024 compliance year that was originally included in the agency’s Aug. 3, 2026, SRE decisions.

Following the Monday decisions, the agency’s SRE dashboard now shows eight remaining petitions split evenly among 2026 and 2027.

The U.S. Department of Energy (DOE), which EPA consults when reviewing SRE petitions, is evaluating its use of its 2011 disproportionate economic hardship methodology and the information required for future petitions to account for current RFS market conditions, according to the agency.

EPA also said it is working with the Commodity Futures Trading Commission amid concerns about recent RIN market volatility and the potential misuse of nonpublic information.

RIN prices escalated after the EPA issued its ruling and OPIS on Monday assessed 2026 ethanol-related D6 RINs at $2.165/RIN — up 10.25cts on the session — and 2026 biomass-based diesel D4 RINs at $2.235/RIN — up 8.25cts day to day.

Proponents of the ethanol industry offered mixed reactions to Monday’s news, lamenting the paradoxical nature of the EPA’s decisions to reward small refiners with exemptions amid record-high quarterly profits, while also being encouraged by the agency’s intent to reallocate exempted volumes in future years.

Emily Skor, CEO of Growth Energy, said the group’s “position hasn’t changed,” emphasizing that “SREs should only be granted when refiners can prove disproportionate economic hardship.”

“It’s difficult to see how these refiners have met this threshold when they’re simultaneously reporting sky-high and, in some cases, record-setting earnings,” Skor said.

Geoff Cooper, president and CEO of the Renewable Fuels Association, characterized the EPA’s SRE action as “unjustified,” but the group is “somewhat encouraged that EPA is taking steps to minimize the damage through reallocation.”

“The proposed plan laid out by EPA today creates a pathway for ensuring no net loss in renewable fuel demand, and it is crucially important that the agency moves quickly to faithfully implement this approach. At a time when oil refiners are reporting record-high profit margins, gasoline supplies are tightening, and consumers are paying record-high prices at the pump, the administration should focus on efforts to increase — not decrease — the domestic production and use of more affordable biofuels like ethanol,” Cooper said.

And Brian Jennings, CEO of the American Coalition for Ethanol, said that it “does not make sense to exempt any refiners from blending low-cost renewable fuels into their outrageously expensive petroleum products.”

“Until reallocation is final and complete, every exempted gallon is an economic drain on rural America. The integrity of the RFS depends on ensuring volume obligations translate into real-world demand. Any gap between required volumes and actual blending undermines the program and creates uncertainty for ethanol producers, farmers and rural communities,” Jennings said.

Monte Shaw, executive director for the Iowa Renewable Fuels Association, said that “every day that passes while these new refinery exemptions are final but the reallocation is hypothetical leaves renewable fuels producers and farmers in the lurch.”

“The EPA must act expeditiously to propose and finalize a rule that reallocates 100% of the new refinery exemptions. Nearly a billion gallons of renewable fuels demand hangs in the balance,” Shaw said.

Meanwhile, the Clean Fuels Alliance America, which represents biodiesel, renewable diesel and sustainable aviation fuel interests, expressed disappointment with the EPA’s SRE decisions. Vice President of Federal Affairs Kurt Kovarik said the group “fundamentally disagrees that small refiners need reprieve from the tepid 2025 RFS volumes set by the prior administration,” but welcomed the administration’s intent to reallocate exempted volumes through supplemental rulemaking.

“We’re hopeful that today’s action won’t reverse the progress we’ve made and that our industry can maintain faith in the RFS program. “We will continue to press the administration to reallocate future small refinery exemptions to ensure they do not harm farmers and other stakeholders in clean fuel production,” Kovarik said.

The Sustainable Advanced Biofuel Refiners (SABR) Coalition, which represents stakeholders throughout the biodiesel value chain, including soybean farmers and processors, biodiesel producers, glycerin refiners and fuel distributors and retailers, said the biodiesel industry “would have taken the brunt of the negative impact of this unexpected expansion of SREs” and urged the EPA to finalize reallocation adjustments “as soon as possible.”

“We are grateful to the administration and the president for their decision today to reinforce their commitment to the RFS made earlier this year and to keep the recovery of the biodiesel and soybean industries going,” SABR CEO Joe Job said.

Agricultural trade groups offered similar mixed reactions to the EPA’s latest action on the 2025 SREs.

The American Soybean Association (ASA) offered appreciation that the administration intervened to prevent a potentially severe loss of soybean oil demand through proposed reallocation of future volumes, but the organization emphasized that the “timing is critical.”

The ASA estimated that, without full reallocation, SREs could have reduced biomass-based diesel demand by about 500 million gal and cost soybean farmers about $1 billion in lost revenue.

“Any delay in reallocation risks undermining the domestic market demand that soybean farmers urgently need as we enter harvest season. EPA must move quickly to fully reallocate these RINs and ensure soybean farmers are held harmless,” ASA Vice President and Iowa soybean farmer Dave Walton said.

The National Oilseed Processors Association (NOPA), whose members account for 98% of all soybeans crushed to make soybean oil in the U.S., remains “disappointed by the sheer magnitude of the exemptions,” and encourages the EPA to “adjudicate future SREs in a manner that keeps RFS volumes whole.”

“Getting the supplemental rule right and delivering strong Set 3 volumes are the next steps. We will continue working with our Congressional champions and the Trump Administration to provide the certainty needed to grow domestic markets, support American farmers and strengthen American energy dominance,” NOPA President and CEO Devin Mogler said.

Meanwhile, the American Fuel & Petrochemical Manufacturers (AFPM), which represents many of the nation’s small refineries, characterized EPA’s intent to reallocate 100% of the exempted RINs to future years as “unlawful.”

“Reallocation is unlawful and serves one purpose: making an historically expensive Renewable Fuel Standard even more expensive. Rather than addressing the real challenges facing the program, EPA has chosen to shift billions of dollars in additional compliance costs onto other refiners and fuel manufacturers,” AFPM President and CEO Chet Thompson said.

“These costs do not disappear. They ripple throughout the economy as consumers pay more at the pump and businesses pay more to move goods. Americans need policies that promote affordability, reliability and energy security. Reallocation does the opposite,” Thompson said.

And the American Petroleum Institute (API), the nation’s largest oil and gas trade group that represents mostly integrated energy companies, said that granting exemptions “significantly above” the EPA’s projection when it released the 2026-2027 RVOs in late March “would be a significant step backward.”

API also opposed reallocating exempted volumes to larger refiners in future years.

“Reallocation of these exempted RVOs to non-exempt refiners would compound the problem. Both actions would inject uncertainty into the fuels marketplace when policymakers are justifiably focused on reducing costs for American consumers,” API CEO Mike Sommers said in a letter to EPA Administrator Lee Zeldin on Monday.

Reporting by Bryan Sims, bsims@opisnet.com; Editing by Maura Hossler, mhossler@opisnet.com