Sources say that the US will finalize biofuel quotas for 2026 by early March and drop import penalties.

According to 'two sources who are familiar with these plans, the administration of Donald Trump intends to finalize biofuel blending targets for 2026 by early March. They will keep them close to their initial proposal, while dumping a plan that penalized imports of renewable feedstocks and fuels. The plan, if finalized by the administration of President Donald Trump, would represent a partial compromise among rival oil and agricultural industry groups. It would preserve increased blending targets that biofuel producers sought while dumping a proposal U.S. refiners had warned would disrupt markets and increase costs.

U.S. Environmental Protection Agency (EPA), which oversees U.S. Biofuel Policy, told industry stakeholders that it plans to send its final proposal?to the White House Budget Office for review this month. The finalization is expected approximately 30 days after the White House?conducts interviews with industry. The EPA proposed in June that total biofuel blending volume would be 24.02 billion gallons by 2026, and 24.46 trillion gallons by 2027. This is an increase from 22.33 bn gallons a year ago. The total included an aim of 5.61 billion for bio-based Diesel, a substantial jump from 3.35 billion in 2025.

Sources told us that the EPA was considering a range between 5.2 and 5.6 billion gallons of bio-based fuel in 2026.

The potential downward adjustment is partly related to the EPA plan to abandon a proposal which would have slashed the value of renewable energy credits granted by the U.S. Government for imported biofuels. This "America First" strategy was hailed by the soybeans and biodiesel industry as a win. Big Oil, led the influential American Petroleum Institute, had argued limiting credits for the foreign supply would constrain availability and drive fuel prices up - a result the White House is keen to avoid, as affordability remains the central political concern going into the mid-term elections in this year. Earlier, it was reported that the EPA considered delaying the proposal by at least a full year. The EPA said the agency was still reviewing comments about the proposed rule. The agency stated that the court filings have publicly stated the goal of the agency to "finalize" the rule in the first quarter 2026.

The EPA will also decide whether or not to require large refiners make up for gallons that were exempted from the agency's Small Refinery Waiver Program. This decision could have a significant impact on overall biofuel blending quotas. In August, the EPA cleared a backlog containing more than 170 requests for small refinery waivers dating back to 2016. Since then, they have granted additional exemptions. Biofuel industry and its legislators have urged the administration to require that refiners offset 100% of the exempted gallon, but the oil industry has refused to comply. The EPA is seeking comments on different proposals, ranging between zero and 100% reallocation. Previously, it was reported that the EPA was considering a plan to allow refiners offset 50% of those gallons. Reporting by Jarrett Renshaw, Editing by ChizuNomiyama

(source: Reuters)