EPA Sets Record RVO Levels | Delayed Restrictions Keep Markets Steady

The Environmental Protection Agency’s (EPA) long‑awaited finalization of the 2026-27 Renewable Fuel Standard renewable volume obligations (RVOs) has landed with historic volume mandates. They include a 70% reallocation of small refinery exemptions and a deferral of initially proposed foreign feedstock restrictions.

Announced March 27 at the White House’s Great American Agriculture Celebration, the Set 2 rule raises total renewable fuel requirements to 25.82 billion renewable identification numbers (RINs) in 2026 and 25.98 billion in 2027. That’s markedly higher than the 2025 baseline and above EPA’s original proposal. The largest component of overall growth is a 65% increase in the biomass-based diesel (BBD) mandates from 2025 to 2026 (Figure 1).

While the headline suggests a more supportive market, underlying fundamentals point to a more balanced pricing outcome. Delayed import restrictions preserve a significant source of BBD supply, maintaining RIN generation alongside higher obligations and limiting upward pressure on pricing. Nevertheless, finalizing the RVO is a crucial component of the clean fuels policy puzzle and should provide clearer guidance on demand for operators and investors in the medium term.are becoming a strategic bridge between today’s cash-flow story and tomorrow’s growth options.

Research Highlights:

• Finalized 2026-27 RVOs – Higher Volumes Offset by Import Restriction Deferral – This report details key changes from the final Renewable Fuel Standard Set 2 rule released March 27 and their impact on biofuel markets.

• Ethanol With CCS – Rail Gains Momentum as Summit Stalls – This report examines the opportunity to integrate CCS into ethanol facilities, highlighting optimized economic pathways, strategies to mitigate execution risk and the potential for additional revenue through carbon dioxide removal credits.

• 1Q26 LCFS Price Forecast – Credit Bank Falls, Price Outlook Remains Soft – We revise our LCFS price and credit bank outlook following the first deficit in five years, evaluate how CARB’s 3Q25 amendments have altered near-term market balance, and outline the implications for the timing of sustained price recovery.

• The Binding Constraint – From EUV Machines to Megawatts – ASML’s monopoly on extreme ultraviolet (EUV) lithography caps upstream AI chip output. Modeling the supply stack – EUV tool deliveries, advanced packaging, high-bandwidth memory – we find AI compute can grow only as quickly as new EUV tools are installed on high-performance computing fab lines. With EUV share committed to smartphones and other segments, ASML’s delivery cadence is the binding limiter for sustained AI scaling.

• D3-D6 RIN Price Forecast – Policy Reset Rebalances Markets – This report offers a near-term outlook for D3–D6 RIN prices through 2027, outlining regulatory drivers and operational implications and strategies for market participants.

Key Takeaways

What did the EPA decide on renewable fuel volumes for 2026 and 2027?

The EPA finalized record-high RVOs, raising total renewable fuel requirements to 25.82 billion RINs in 2026 and 25.98 billion in 2027. These levels exceed both 2025 volumes and the EPA’s original proposal, with a sharp increase in biomass-based diesel mandates driving most of the growth.

Why didn’t the higher mandates immediately tighten the market?

The EPA delayed proposed restrictions on foreign feedstocks, which keeps a key source of biomass-based diesel supply in place. That continued supply supports RIN generation and helps offset the impact of higher obligations, limiting near-term upward pressure on prices.

Why is this rule still important for the market?

Finalizing the RVOs provides much-needed clarity on future demand for renewable fuels. Even with balanced pricing fundamentals, the rule gives operators and investors clearer guidance and reduces uncertainty in clean fuels planning over the medium term.