EPA Proposes Reallocating 2025 Exempted RINs After Corn and Soybean Price Drops

The U.S. government, through the Environmental Protection Agency (EPA), announced a review of the exemptions granted to refineries from the mandatory biofuel blending requirement. The proposal seeks to reallocate 100% of the exempted volumes corresponding to 2025, equivalent to 1.76 billion RINs, distributing them across subsequent compliance years, after the original measure hit corn and soybean oil prices.

On August 31, the EPA had exempted 29 refineries from the mandate to blend biodiesel with diesel and bioethanol with gasoline: 18 received a 100% exemption and 11 received a 50% exemption, which resulted in the cancellation of a total of 1.76 billion RINs for compliance with the 2025 mandate. That decision had a bearish impact on soybean oil and, to a lesser extent, on U.S. corn, since the exemptions were equivalent to 13.4 billion gallons of gasoline and diesel, or 7.5% of the country's annual supply of both fuels.

According to the EPA, of the 1.76 billion RINs exempted for 2025, around 990 million had already been anticipated, so the proposal aims to reallocate the difference, close to 770 million RINs. The agency put forward two alternatives: splitting that additional obligation equally between the 2026 and 2027 compliance years, or assigning the entire volume to 2027. EPA Administrator Lee Zeldin presented the initiative in Peosta, Iowa, as part of revisions to the RFS Set 2 rule.

The Renewable Fuels Association (RFA) thanked Zeldin and the White House for the proposal. Its president, Geoff Cooper, noted that although they consider most of the exemptions unjustified, the reallocation plan will help offset the loss of demand for bioethanol producers and farmers, and called for it to be finalized quickly ahead of 2027. For its part, Clean Fuels Alliance America, which represents the biodiesel sector, warned that following the exemptions, diesel prices kept rising and its supply continued to fall, and noted that no exempted refinery followed through on announcing new investments or capacity expansions.

Soybean oil futures on the Chicago Board of Trade (CBOT) deepened their losses on October 14 following the EPA's October 13 announcement. The December contract had touched an intraday high of 70.08 cents per pound on October 13 before reversing and closing at 68.02 cents, and continued falling to 67.11 cents on October 14. Uncertainty over the implementation timeline and the opening of a new public comment period through December 4 tempered the bullish impact the market had already priced in, in a context also marked by the advancing U.S. soybean harvest.

The EPA is expected to formally publish the proposal to recover the lost RINs before the end of October, which will then have to undergo a public comment period before being approved or rejected. Several details of the rule remain open, including the exact volume of 2025 exemptions to be covered, the final RFS volume tables, and the implementation timeline.