Historic Renewable Fuel Standard Set 2 Rule Drives Higher Biodiesel Demand and Rural Economic Growth
The U.S. Environmental Protection Agency has finalized its historic Renewable Fuel Standard Set 2 rule, establishing the renewable fuel volume requirements for 2026 and 2027 at the highest levels in the program’s history. The decision marks a significant milestone for American agriculture, particularly for soybean producers, as it dramatically increases biomass-based diesel demand.
Under the finalized rule, the EPA is raising biomass-based diesel volume requirements from 3.35 billion gallons to approximately 5.4 billion gallons for both 2026 and 2027. These increases represent the strongest Renewable Volume Obligations ever finalized for biomass-based diesel and carry major implications for soybeans, which remain the number-one feedstock used in biodiesel and renewable diesel production.
To meet the historic volume levels set for 2026 and 2027, the EPA estimates that combined biodiesel and renewable diesel production and use will need to increase by more than 60 percent compared to 2025 volumes. This substantial growth signals a sharp expansion in soy oil demand and U.S. soybean processing capacity, reinforcing the importance of domestic biofuel markets for crop farmers.
Beyond direct impacts on agricultural demand, the EPA projects that the Set 2 rule will deliver widespread economic benefits. According to agency estimates, the increased renewable fuel volumes will generate more than $10 billion for rural economies and support the creation of over 100,000 new jobs across agricultural and manufacturing sectors. These gains highlight the Renewable Fuel Standard’s role as both an energy policy and an economic development tool for rural America.
To provide continued certainty for corn growers and ethanol producers, the EPA confirmed it will maintain the 15 billion gallon conventional biofuel requirement for both 2026 and 2027. This move ensures stability for ethanol markets while allowing room for growth in advanced and biomass-based fuels.
Looking ahead, the EPA also announced a significant policy shift beginning in 2028. Starting that year, foreign fuels and feedstocks will receive only half the Renewable Fuel Standard compliance value compared to American-made products. This adjustment is designed to give domestic biofuel producers time to prepare while ensuring the benefits of the program increasingly flow to American farmers, processors, and energy producers, strengthening U.S. energy independence.
The American Soybean Association welcomed the EPA’s final rule and emphasized its importance to soybean farmers nationwide.
“ASA is grateful for the tireless efforts of EPA and USDA to ensure the soy biofuel value chain could benefit from the strongest RVOs ever finalized,” said Scott Metzger, American Soybean Association president and an Ohio soybean farmer.
“The 2026-2027 RVOs will increase soybean oil use, boost U.S. soybean processing, and grow domestic biofuel markets for our crop. ASA and our soybean farmer members applaud the Trump Administration for getting this tremendous rule across the finish line.”
The EPA also addressed long-standing issues related to small refinery exemptions by reallocating 70 percent of retroactive exemption volumes from 2023 through 2025. In a media release, ASA said it appreciates the agency clearing a significant backlog of legacy exemptions dating back to 2016 and welcomed the reallocation of volumes back into the blending pool to support additional biofuel production and increased soybean demand.
ASA further expressed support for the EPA’s decision to reduce credit generation for imported biofuels and biofuel feedstocks beginning in 2028. If maintained in future Renewable Volume Obligation rulemaking, the credit reduction is expected to act as a major economic driver for the domestic biomass-based diesel value chain and further catalyze demand for U.S.-grown soybeans.
According to ASA, domestic biofuel production now accounts for more than half of all U.S. soybean oil consumption and represents a critical market for soybean farmers. Renewable volume obligations created through the Renewable Fuel Standard remain the cornerstone of domestic soy-based biofuel demand.
With the 2026 and 2027 volumes now finalized, the Set 2 rule stands as the most significant year-over-year improvement in Renewable Fuel Standard rulemaking for biomass-based diesel and for U.S. soybean farmers alike.