Reporting from Todd Gleason features analysis from University of Illinois Agricultural Economist Scott Irwin on how the EPA’s 100% reallocation of Small Refinery Exemptions turns a large exemption headline into a net-neutral wash that supports biomass-based diesel.
Gleason reports that while the Environmental Protection Agency recently ruled on 34 petitions for Small Refinery Exemptions (SREs)—totaling nearly 1.8 billion gallons in exemptions at 50% or 100% levels for the 2025 Renewable Fuel Standard compliance year—the move is actually unvarnished good news for agriculture and biofuels. In an interview with Gleason, University of Illinois Agricultural Economist Scott Irwin explained that the broader policy framework offsets the immediate volume hit.
Full Reallocation Offsets Exemption Numbers
The key takeaway highlighted by Gleason and Irwin is the EPA’s upcoming supplemental rulemaking scheduled by the end of October. Through this rule, the agency plans to reallocate 100% of the extra Renewable Identification Number (RIN) volumes from these 2025 SREs into the 2026 and 2027 compliance obligations.
Irwin pointed out to Gleason that this 100% reallocation is both critical and surprising:
- Under the previous “set rule” for 2026 and 2027, the EPA had only reallocated 70% of projected SRE volumes.
- Restoring 100% of the extra 2025 volumes into 2026 and 2027 obligations makes the total volume impact essentially a wash rather than a reduction in biofuel demand.
- The recaptured volume guarantees the demand remains intact across upcoming compliance years.
Commodity and Biofuel Market Impacts
Irwin told Gleason that the decision carries minimal implications for the corn market, noting that ethanol remains largely neutral to SRE shifts.
The clear beneficiaries of the EPA’s decision are biodiesel, renewable diesel, and soybean oil. With full reallocation secured for 2026 and 2027, the biomass-based diesel sector gains a constructive, positive trend moving forward.
Scott Irwin is an agricultural economist on the Urbana-Champaign campus of the University of Illinois and member of the farmdoc team. The Environmental Protection Agency yesterday announced a decision on 34 petitions from small refineries seeking exemptions, or SREs, from compliance with the 2025 Renewable Fuel Standard obligations. The agency expects the exemptions to be reallocated into 2026 and 2027. Audio and story courtesy of Todd Gleason at the University of Illinois.
