The US Environmental Protection Agency plans to finalise 2026 biofuel blending quotas by early March, keeping them close to its initial proposal, while dropping a plan to penalise imports of renewable fuels and feedstocks, according to a Reuters report quoting two sources familiar with the plans.
If finalised, the plan would mark a partial compromise between rival oil and farm industry groups by preserving increased blending targets sought by biofuel producers while dropping a proposal that US refiners had warned would disrupt fuel markets and raise costs, the 15 January report said.
The EPA which oversees US biofuel policy, had told industry stakeholders it aimed to send the final proposal to the White House budget office for review this month, with finalisation expected around 30 days after that, following industry interviews by the White House.
In June, the EPA proposed total biofuel blending volumes of 24.02bn gallons (91bn litres) in 2026 and 24.46bn gallons (92.6bn litres) in 2027, up from 22.33bn gallons (84.4bn litres) in 2025. The total included a target of 5.61bn gallons (21bn litres) for bio-based diesel, a significant jump from the 3.35bn gallons (12.6bn litres) in 2025.
The EPA was now considering a range of 5.2bn-5.6bn gallons (19.6bn- 21bn litres) for bio-based diesel in 2026, the sources told Reuters.
The potential downward adjustment was partially related to the EPA's plan to drop a proposal that would reduce the value of renewable fuel credits given by the US government for imported biofuels, an “America First” policy that had been welcomed by the soyabean and biodiesel industries, the report said.
The petroleum industry, led by the influential American Petroleum Institute industry group, had argued that limiting credits for foreign supply could constrain availability and push fuel prices higher – an outcome the White House was eager to avoid as affordability remained a central political concern heading into mid-term elections this year, Reuters wrote.
On 19 November, Reuters reported that the EPA was considering delaying the proposal for at least a year.
The EPA told Reuters the agency was still reviewing comments on the proposed rule.
“As publicly stated in court filings, the agency aims to finalise in the first quarter of 2026,” the agency said.
The EPA was also expected to decide if larger refiners would be required to make up for gallons exempted under the agency’s small refinery waiver programme, a determination that could significantly affect overall biofuel blending quotas, Reuters wrote.
In August, the EPA had cleared a backlog of more than 170 small refinery exemption requests dating back to 2016 and, since then, had issued additional exemptions, the report said.
The biofuel industry and its legislative allies have been urging the administration to require refiners to offset 100% of those exempted gallons, while the oil industry is resisting the obligations, according to the report.
The EPA has been seeking comment on a range of proposals, ranging from zero reallocation to 100%.
In September, Reuters reported that the EPA was considering a plan for refiners to offset 50% of exempted gallons.
