Top Four Takeaways from EPA’s public hearing on the 2026-2027 RFS Standards Proposed Rule

July 10, 2025/Hoekstra Trading LLC/Comments Off

On July 8, 2025, the U.S. Environmental Protection Agency (EPA) held a public hearing on the 2026-2027 proposed Renewable Fuels Standard (RFS) renewable fuel volume obligations and the partial waiver of the 2025 cellulosic renewable fuel volume obligation. The comment period for this EPA proposal closes August 8, 2025.

Below are my top 4 takeaways from the morning session.

Number 4: Big Climate is not happy

Those opposed to liquid fuels do not like the higher volume obligation levels. They say this will increase global air pollution, water pollution and carbon emissions. Increased use of ethanol and soybean oil for fuel production will increase conversion of natural lands to farm use.

Number 3: Big Oil is conflicted

Some refining segments continue to blame poor profitability and refinery closures on Renewable Identification Number credit costs — they call for actions that would decrease D6 and D4 Renewable Identification Number (RIN) credit prices. American Fuel and Petrochemical Manufacturers seems less explicit in making this argument than they have been in the past. They support the elimination of e-RINs (RINs for biogas used to fuel electric vehicles) and support the partial waiver of the cellulosic biofuel renewable volume obligations. Others, like American Petroleum Institute, support the higher proposed renewable volume obligations but expressed concern over implementation of the proposed reduction of “equivalence value” for import-derived renewable fuel which would reduce the RIN generation rate for import-derived biofuels (editorial comment: the term “equivalence value” refers to relative energy content — this parameter should be renamed after having now redeployed it from a scientific to a purely political use).

Number 2: Big Biogas is unhappy

Biogas is produced mostly from landfills and animal manure. It accounts for almost all cellulosic biofuel RIN generation. Lower cellulosic biofuel volume obligations will reduce expected cash flows from investments in biogas for use in transportation. Lower D3 RIN prices will cause new investment to dry up and growth of this new all-American industry to stall. Biogas investors, developers and trucking fleets are challenging EPA’s use of supposed demand constraints to set volume obligations at a time when biogas production has been growing at nearly 30% /year, driven by U.S. government subsidies. Expect more data on potential biogas demand growth, and intense lobbying on this topic.

Number 1: Big Corn is happy

The morning testimony opened with praise for EPA and strong support from ethanol, soybean, and agricultural interests for the proposed implied conventional and biobased diesel mandate levels which will help farmers and biodiesel producers who have been hurting. But strong concerns were expressed about the outcome of the Sustainable Revenue for Expensive Lawyers (oops-I mean the Small Refinery Exemption or “SRE”) issue, which could undermine the integrity of the mandates. EPA should be extremely judicious” in granting past exemptions, granting them only where there has been “proof of disproportionate economic harm caused by the Renewable Fuels Standard”, using a “high standard of proof” to “prevent SRE abuse”. This was the single strongest message I heard coming through in the morning testimony.

I attended the morning half of the hearing webinar but was unable to attend the afternoon. More highlights to come after the transcript is released.