EPA Focuses the RFS on American Farmers

By Donnel Rehagen, CEO

The primary driver behind the Environmental Protection Agency's historic 2026 - 2027 RFS volumes is the program's benefit to American farmers. In a major turnaround from previous rules, the agency found there is no constraint on farmers' ability to deliver biofuel feedstocks. Moreover, EPA determined that the RFS can drive additional investment and economic opportunity for rural America.

"These volumes reflect our consideration of the impacts of these fuels on the statutory factors, including the potential increases in employment and economic impacts for renewable fuel producers, feedstocks producers and processors, and the rural communities in which these facilities are located." - EPA, RFS Program Standards for 2026 and 2027

EPA's action is well-timed. U.S. farmers have faced several years of economic hardship from rising input costs for fuel and fertilizer. They've lost important overseas markets to trade barriers and foreign competition. From March 2025 to February 2026, U.S. agriculture lost $14.9 billion in annualized sales to China due to tariffs, a new study from economists at North Dakota State University finds. Soybean farmers absorbed nearly half of those losses ($6.8 billion). And soybean-growing states like Iowa, Illinois, Kansas, Nebraska and Minnesota experienced the heaviest losses.

Increasing domestic biodiesel, renewable diesel, and SAF production through the RFS can provide a stable, predictably growing domestic market for U.S. farmers and improve economic prospects. EPA recognizes in the rule that higher commodity prices are justified - even necessary - to boost income for American farmers. The agency states plainly in the final rule and accompanying regulatory impact analysis that building domestic markets and reducing reliance on export markets is a primary reason to increase RFS volumes.

EPA is purposefully building a domestic market for U.S. farmers. The agency anticipates biomass-based diesel production from soybean oil to nearly double from approximately 1.3 billion gallons in 2025 to more than 2.5 billion gallons in 2027. It also projects increasing use of other crop oils - canola in particular - and co-products of crops like distillers corn oil.

The agricultural economy is already responding to the signal. Domestic biodiesel, renewable diesel and SAF production are reaching capacity utilization rates not seen since 2024. Renewable diesel and SAF producers ran at historically high rates in May, positioning to ramp up even further. In April, U.S. biodiesel companies produced 129 million gallons of fuel; the highest monthly production rate in recent years was 176 million gallons. Biodiesel producers ran about 75% of their demonstrated capacity in April and May.

That's generating vital market pull for farmers. The clean fuels industry's March production utilized record amounts of domestic soy oil and distillers corn oil, according to Energy Information Administration data. Increasing availability of soy, canola and other crop oils reflects the investments the oilseed processing industry has made over the last several years.

And more growth is expected. In its May 2026 and June 2026 World Agricultural Supply and Demand Estimates (WASDE) reports, USDA expects soybean oil use in biomass-based diesel to reach 17.8 billion lbs. in the 2026-27 marketing year - essentially 1.5 billion lbs. per month.

USDA projects U.S. soybean crush at 2.75 billion bushels this year - which would produce approximately 32.4 billion lbs. of soybean oil. If USDA economists are right, U.S. biodiesel, renewable diesel, and SAF production would provide a value-added market for 50% of this year's available domestic soybean oil.

Past growth in U.S. biodiesel and renewable diesel was founded on the growing surplus of oil. But increased clean fuel production is now driving demand for oil, investment in domestic processing capacity, and sustained value to farmers. As illustrated in the chart below, domestic soybean oil supplies used in biodiesel and renewable diesel have increased steadily with growing farm productivity. The amount used in food and other applications has been stable for nearly two decades, even with population increases.

Biomass-based diesel production represents 10% of the value of every bushel of soybeans grown in the United States, when you consider data from the past decade. As more and more of the value of the soybean crop is derived from the oil, the domestic biodiesel and renewable diesel market becomes a more critical and reliable part of the value.

EPA calculates that the recently finalized 2026-2027 RFS volumes will generate $10.08 billion annually in rural economic development benefits over the next two years. Those economic benefits are targeted to U.S. farmers in terms of higher commodity prices and increased GDP. But they are additive to the energy security and other societal benefits delivered to the American economy.

Importantly, EPA recognizes that additional investment, job creation, and industry expansion is possible. The agency carefully and fully assessed the announced investments and planned expansions for oilseed processing and fuel production. And then it recognized that companies who made investments in the last few years are unlikely to do so in future unless they have a reasonable expectation of a return on their current investments.

"Increasing domestic production of biodiesel and renewable diesel is also expected to result in increased investment in domestic oilseed crushing to supply feedstocks for biofuel production. These investments would decrease the reliance of domestic soybean producers on export markets and further benefit rural economic development and employment." - EPA, RFS Program Standards for 2026 and 2027

Biodiesel, renewable diesel, and SAF already provide an essential market for American farmers. A strong domestic market is the best opportunity for farmers to regain economic momentum after several years of challenging market conditions.

The clean fuels industry appreciates EPA's emphasis in this RFS rule on rural economic development, job creation, and investment in domestic production capacity and feedstock supply. For years, we've asked EPA to recognize not just the existing biomass-based diesel production and feedstocks supply, but also the potential for future growth. This is the right course for the RFS program. It will be important to maintain this approach in the upcoming rule for 2028 and beyond to provide certainty and stability to farmers.

ABOUT CLEAN FUELS ALLIANCE AMERICA

Made from an increasingly diverse mix of resources such as recycled cooking oil, soybean oil, and animal fats, the clean fuels industry is a proven, integral part of America's clean energy future. Clean Fuels Alliance America is the U.S. trade association representing the entire biodiesel, renewable diesel and sustainable aviation fuel supply chain, including producers, feedstock suppliers and fuel distributors. Clean Fuels receives funding from a broad mix of private companies and associations, including the United Soybean Board and state checkoff organizations.

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