EPA Proposes 100% Reallocation for Refinery Biofuel Breaks
Source: By Elizabeth Elkin, Bloomberg • Posted: Tuesday, October 13, 2026
The Trump administration said it will make up for lost biofuels demand after the biggest breaks from blending mandates for refiners in nearly a decade, providing a boost for American farmers.
The Environmental Protection Agency will propose to make oil refiners blend more biofuels through next year to make up for recent exemptions from mandates compelling the use of corn and soy-based fuels, the agency said in a statement to Bloomberg. The proposal is to reallocate 100% of the difference between actual and exempted volumes for 2025 small refinery exemptions into the 2026 and 2027 obligations.
The decision reaffirms the EPA’s plan announced in August, when it granted smaller oil refineries the biggest amount of exemptions from mandates requiring them to blend biofuels into gasoline and diesel since 2017. In a nod to farmers, it also said it would essentially force refiners that didn’t receive breaks to pay for those that did in a process called reallocation, which has been a sore point for the oil industry.
“EPA is keeping our promise to open new markets for farmers,” the agency said in the statement. This is to “ensure they have a reliable and durable market to sell their crops.”
Biofuels offer a promising market for farmers struggling with lackluster demand for crops and soaring prices for inputs including fertilizer and diesel. While the breaks for refiners threaten to limit the potential on biofuels, reallocation helps restore the balance, providing a boon for farmers ahead of midterm elections.
“Reallocating lost gallons would strengthen the rural economy and provide relief to farmers looking for reliable new markets that won’t be destroyed by costly exemptions,” said Emily Skor, chief executive officer of biofuels trade association Growth Energy.
Shares of ethanol maker Green Plains Inc. jumped on the news, extending gains to as much as 6.9%. Darling Ingredients Inc. climbed as much as 3.8%. Crop traders Archer-Daniels-Midland Co. and Bunge Global SA also rose.
The administration’s approach underscores the difficult balancing act for Trump between the oil and agriculture industries, two important constituencies with competing demands on biofuel policy. The result is a compromise that gives refiners billions of dollars worth of breaks while softening the blow to producers of ethanol and biodiesel. Oil companies with larger refineries, however, are left with a heavier burden.
The EPA’s proposal still needs to be finalized, and the agency will take public comments until Dec. 4, it said in a separate statement. It is seeking comment on two potential ways to to reallocate the volumes — by dividing the additional amount of biofuels equally between the 2026 and 2027 compliance years, or by reallocating all the volumes to 2027.
The proposed changes could extend the existing 2026 compliance reporting deadline, which is currently March 31, 2027, according to the statement.
The Renewable Fuel Standard program, which was created by Congress two decades ago to bolster domestic demand and support rural communities, requires refiners to blend a certain amount of biofuels into gasoline and diesel.
Many companies, rather than blending biofuels like ethanol and biodiesel themselves, buy tradeable credits — so-called renewable identification numbers, or RINs — from those that do. Those credits have spiked in price this year after the Trump administration set record-high blend quotas and as war in the Middle East strained global fuel supplies.
Some small and mid-sized refiners have argued that they need breaks from these mandates to keep certain refineries profitable. But others have said that some companies make a lot of money off of those small-refinery exemptions, or SREs.
“With refiners enjoying record-high profit margins, gasoline supplies tightening, and drivers still paying too much at the pump, the Trump administration understands this is no time to undermine domestic biofuels with SREs,” said Geoff Cooper, president of the Renewable Fuels Association.
Chet Thompson, president of the American Fuel and Petrochemical Manufacturers, an industry association representing refiners, said the proposed reallocation would only make fuel more expensive for US consumers.
“The existing mandates are already the highest ever,” he said in a statement. “Enough is enough.”
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