EPA's Proposed RFS Expansion: A Boost for U.S. Agriculture and Renewable Fuels

The Environmental Protection Agency (EPA) has taken a significant step towards bolstering the renewable fuels sector with its Notice of Proposed Rulemaking (NPRM) published on June 13, 2025. This proposal aims to increase the Renewable Fuel Standard (RFS) volumes, which are produced from feedstocks such as corn, soybeans, used cooking oil, and animal fats. The NPRM includes higher volume targets for advanced fuels like cellulosic biofuel and biomass-based diesel, and it limits the use of imported materials to generate Renewable Identification Numbers (RINs), thereby making U.S.-grown crops more competitive.

The RFS program, established in the Energy Policy Act of 2005, mandates specific volumes of renewable fuel to be blended into U.S. transportation fuel each year. These volumes, known as Renewable Volume Obligations (RVOs), are set across four categories: total renewable fuel, advanced biofuel, cellulosic biofuel, and biomass-based diesel. The EPA updates these standards through the rulemaking process to reflect projected fuel use and renewable fuel availability.

The proposed changes to the RFS program are substantial. The total renewable fuel mandate is set to increase by 2.13 billion RINs, from 22.33 billion in 2025 to 24.46 billion in 2027. This represents an overall increase of 9.5%, with a 7.6% increase from 2025 to 2026 and a 1.8% increase from 2026 to 2027. The cellulosic biofuel target will rise to 1.30 billion RINs in 2026 and 1.36 billion in 2027, a 14.3% increase over the two-year period.

The proposal also includes several regulatory changes to strengthen the implementation of the RFS program. These changes include reducing the number of RINs generated for imported renewable fuel and renewable fuel produced from foreign feedstocks, as well as removing renewable electricity as a qualifying renewable fuel under the RFS program (eRINs).

The potential impact of these changes on the agricultural sector is significant. Soybean and corn farmers could see a positive price catalyst, as soybean oil (biodiesel feedstock) prices surged on the news of the proposed rule, and corn ethanol programs historically raised corn prices by 12–30%, benefitting farmers. The rule provides regulatory certainty for investment in new or upgraded biofuel facilities, which could lead to increased capacity utilization and potential reactivation of idled plants. This is likely to result in major players producing more ethanol and other biofuels.

However, there are also potential challenges. Higher corn and soybean demand can tighten food markets, and studies on RFS-induced food price increases are mixed—some show moderate impact, others a rise in food prices attributed to biofuels. Increased cropland and fertilizer use also have environmental repercussions, including potential GHG and water-quality impacts. Assessments suggest corn-ethanol may not be significantly cleaner than gasoline when considering land-use changes. Despite these challenges, the overall impact is expected to be positive for the agricultural sector, with increased local activity, including equipment and transport services, feedstock logistics, and construction.

The EPA will hold a virtual public hearing on July 8, 2025, to gather feedback on the proposed rule. This hearing will provide an opportunity to assess the potential impacts and benefits of the proposal from various stakeholders, including farmers, refiners, and environmental groups.

The economic and environmental benefits of the proposed changes to the RFS program are expected to be substantial. The proposal aims to "preserve demand for American feedstocks and expand market opportunities for U.S. farmers." This increased demand is expected to benefit soybean and corn farmers, as soybean oil and corn are key feedstocks for biodiesel and ethanol production, respectively. For instance, soybean oil prices surged on the news of the proposed rule, indicating a positive market response.

The proposal is also likely to create new job opportunities in agriculture, crushing plants, and biofuel facilities. This is supported by the fact that increased local activity in these sectors will lead to indirect benefits, including equipment and transport services, feedstock logistics, and construction.

The EPA estimates that the proposal would reduce U.S. oil imports by approximately 150,000 barrels per day over 2026-2027. This reduction in oil imports enhances energy security and supports the nation's status as a net exporter of petroleum products.

The environmental benefits of the proposed changes are also significant. The RFS program was created to reduce GHG emissions. The proposed changes, which include higher volume targets for advanced fuels like cellulosic biofuel, are expected to contribute to this goal. For example, the cellulosic biofuel target would rise by 14.3% over the two-year period, from 1.19 billion RINs in 2025 to 1.36 billion in 2027.

The economic benefits can be measured through market indicators such as the prices of soybean oil and corn, job creation statistics in the agriculture and biofuel sectors, and the volume of oil imports. The environmental benefits can be evaluated through metrics such as the reduction in GHG emissions, the volume of renewable fuels blended into transportation fuel, and the decrease in oil imports.

The EPA will accept public comments until August 8, 2025, on the proposal following its publication in the Federal Register. The Agency will host a public hearing on July 8 and July 9. Register for either hearing by emailing RFS-Hearing@epa.gov. We anticipate a final rulemaking later this year.