EPA's Small Refinery Exemptions: A Balancing Act for Biofuels and Rural Economies

The Environmental Protection Agency's (EPA) recent decision on small refinery exemptions (SREs) has sparked a mix of reactions from stakeholders in the renewable fuel industry. American Farm Bureau Federation President Zippy Duvall, for instance, highlighted the significance of the Renewable Fuel Standard (RFS) in reducing the country's dependence on foreign oil, increasing farm income, and providing jobs in rural America. However, the EPA's measured approach to granting exemptions has raised questions about the future of the biofuels market and the impact on farmers.

The EPA's decision to grant full exemptions to 63 petitions and partial exemptions to 77 out of 175 SRE petitions reflects a nuanced understanding of the economic hardships faced by small refineries. This approach, reaffirmed from the first Trump Administration, grants partial relief (a 50 percent exemption) where a small refinery has demonstrated partial hardship. This policy recognizes that some small refineries are impacted more significantly than others, and that EPA’s relief should reflect those differences.

The EPA's decision to return RFS compliance credits, known as Renewable Identification Numbers (RINs), previously retired for compliance when a small refinery receives an exemption for a prior compliance year, is a significant move. This policy helps to mitigate the impact of exemptions on the overall RIN market and ensures that the number of RINs available to meet 2024 and future compliance obligations is not affected. The EPA's approach to granting exemptions and returning RINs demonstrates a commitment to balancing the needs of small refineries with the goals of the RFS program, ensuring that the intended volumes of renewable fuel are blended into the nation’s fuel supply.

The EPA's decision to update the RFS Small Refinery Exemption website and submit a draft supplemental proposed rule to the Office of Management and Budget (OMB) on the proposed reallocations of the 2023 and later compliance year exempted volumes ensures transparency and stability in the market. The EPA will also be providing updated information on how the agency intends to project SREs for 2026 and 2027 in the context of establishing percentage standards for those years. The proposed adjustments will help ensure that refineries blend the intended volumes of renewable fuel into the nation’s fuel supply in 2026 and 2027 after accounting for the SREs granted for 2023 and 2024 in today’s actions and projected SREs granted for 2025 – 2027 in Set 2.

The EPA's decision to prioritize domestic biofuels over foreign sources is expected to support American farmers. The "Set 2" proposal ensures that the RFS program remains true to Congress’ original intent of increasing the use of homegrown American biofuels, unleashing American energy, and supporting rural economies. The proposed rule strengthens U.S. energy security by reducing reliance on foreign sources of oil by roughly 150,000 barrels of oil per day over the time frame of the Set 2 rule, 2026 and 2027. Additionally, in 2024, about 45 percent of biomass-based diesel (BBD) feedstock and finished fuel came from foreign sources. By reducing the value of the RIN for foreign biofuels and feedstocks, it will decrease America’s reliance on these imports, promote U.S. production, and increase American energy security.



The EPA's decision to grant exemptions and return RINs demonstrates a commitment to balancing the needs of small refineries with the goals of the RFS program. This approach ensures that the intended volumes of renewable fuel are blended into the nation’s fuel supply, supporting American farmers and rural economies. The EPA's decision to update the RFS Small Refinery Exemption website and submit a draft supplemental proposed rule to the OMB on the proposed reallocations of the 2023 and later compliance year exempted volumes ensures transparency and stability in the market. The EPA's decision to prioritize domestic biofuels over foreign sources is expected to support American farmers and rural economies, strengthening U.S. energy security and reducing reliance on foreign sources of oil.