U.S. EPA Set to Propose Biomass-Based Diesel Quotas Below Industry Expectations, Sources Say

By Stephanie Kelly and Jarrett Renshaw

NEW YORK, June 12 – The U.S. Environmental Protection Agency on Friday will propose new biofuel blending requirements for oil refiners for the coming two years that will likely include a lower biomass-based diesel mandate than industry groups had requested, according to four sources familiar with the matter.

The White House has completed its review of the EPA’s plan and returned it to the EPA for further action, according to the website for the Office of Management and Budget. The EPA is expected to announce the proposal on Friday, the sources said.

The oil and biofuel industries, both major lobbying powers in Washington, have highly anticipated the release of the proposal, which will determine the fate of billions of dollars in fuel and tradable credit transactions.

Under the Renewable Fuel Standard, refiners are required to blend massive volumes of biofuels into the nation’s fuel supply or purchase credits, called RINs, from those that do.

As one of the first decisions the current Trump administration makes regarding federal biofuel policy, the proposal will also give insight into whether President Donald Trump will bolster the biofuel industry, which has at times been at odds with oil companies.

The EPA’s proposal is expected to cover both 2026 and 2027, Reuters previously reported.

The biomass-based diesel blending requirements are a major focus of the proposal for industry participants, as some believed previous obligations were too low.

A U.S. and biofuel coalition led by the American Petroleum Institute advocated in recent months that the EPA propose federal mandates for biomass diesel blending for 2026 at 5.25 billion gallons, which would be a significant increase from previous mandates, Reuters previously reported, citing sources.

However, sources told Reuters on Thursday that the EPA was expected to propose biomass-based diesel blending quotas lower than 5.25 billion gallons.

The EPA had set biomass-based diesel mandates for the 2025 compliance year at 3.35 billion gallons.

The coalition, which brought some oil and biofuel groups together in a historically unusual move, had also recommended total federal biofuel blending mandates for 2026 – including corn-based ethanol and advanced biofuels – at 25 billion gallons.

The EPA did not comment on the quota levels.

Republican Senator Chuck Grassley of Iowa, a biofuels advocate and the second-highest-ranking official in the Senate, posted on social media platform X in response to Reuters’ report. “If Pres Trump wants 5 closed biodiesel plants to reopen & jobs in rural America we’ve got to hv the 5.25 BILLION for biodiesel,” he posted.

The agency said it would post the proposal on the EPA’s website once Administrator Lee Zeldin signs it.

Biomass-based (D4) credits RIN-D4-US were bid at 96 and 97¢ each, down from trading at $1.02 each on Wednesday.

Renewable fuel (D6) credits <RIN-D6-US> for 2025 traded at 92.5¢ on Thursday, down from 94.5¢ and 95¢ each on Wednesday, traders said.

Industry participants are also awaiting indication on how the EPA will address outstanding requests from small refineries for exemptions to the mandates. Small refiners can seek exemptions to the obligations if they can prove the requirements would cause them undue harm.

The White House is weighing a plan to clear a record backlog of those requests, Reuters previously reported, citing sources, which could include approving many current applications and requesting industry input to deal with older ones.

There are more than 160 outstanding requests for exemptions that represent potentially billions of dollars worth of tradable credits.

(Reporting by Stephanie Kelly and Jarrett Renshaw; Editing by Marguerita Choy and Diane Craft)