Why It Matters
EPA's latest renewable fuel rule, released in March, expands the volume of biofuels required in U.S. transportation fuel for 2026 and 2027, but a Congressional Research Service (CRS) report shows the mandate continues to rely almost entirely on corn ethanol despite the program's original intent to spur advanced biofuels. For the Trump administration, the rule signals commitment to agricultural interests while potentially exposing the Environmental Protection Agency (EPA) to further litigation over environmental analysis. The statutory volume requirements for total renewable fuel and advanced biofuel were not met from 2014 to 2022.
The Big Picture
The Renewable Fuel Standard, enacted in 2006, requires U.S. transportation fuels to contain a minimum volume of renewable fuel annually. Congress set a statutory target of 36 billion gallons by 2022, but EPA invoked waiver authority repeatedly from 2014 onward to set volumes below that threshold, citing underproduction of advanced biofuels, infrastructure constraints, and slow technological progress. When the program entered a new phase in 2023, EPA gained statutory authority to set its own annual requirements.
EPA's Set 1 Rule, finalized in July 2023, raised total renewable fuel volumes to 22.68 billion gallons for 2025. The subsequent Set 2 Rule, released in March 2026, pushes that further to 25.82 billion gallons for 2026 and 25.98 billion gallons for 2027. However, corn starch ethanol continues to dominate compliance, accounting for the largest share of renewable identification numbers, or RINs, the tradable credits EPA uses to track compliance.
The Set 2 Rule removed renewable electricity (eRINs) as a qualifying renewable fuel. The agency partially waived the 2025 cellulosic biofuel requirement, acknowledging persistent shortfalls in that category. EPA required a 70 percent partial reallocation of small refinery exemption volumes from 2023 to 2025 into the 2026 and 2027 compliance years, and reduced the equivalence value for renewable diesel from 1.7 to 1.5. The agency deferred its proposed Import RIN Reduction policy, which would limit credits for imported renewable fuel, until 2028 or later.
The D.C. Circuit Court previously remanded EPA's Set 1 Rule on grounds that the agency inadequately explained its climate change analysis and that the U.S. Fish and Wildlife Service failed to justify its findings under the Endangered Species Act. As of July 2026, eight petitions challenging the Set 2 Rule have consolidated in the same court under Center for Biological Diversity v. EPA, raising issues from environmental impacts to small refinery treatment to the removal of renewable electricity eligibility.
The Bottom Line
The Trump administration is simultaneously advancing ethanol production through executive orders while defending EPA's expanded renewable fuel mandate against legal challenges that question its environmental justification. Executive Order 14156, "Declaring a National Energy Emergency," included a provision addressing year-round sale of E15 fuel. E.O. 14309, "Implementing the General Terms of the United States of America–United Kingdom Economic Prosperity Deal," enabled over $700 million in ethanol exports to the United Kingdom.
Yet litigation over EPA's environmental review and ongoing cellulosic biofuel shortfalls suggest the program remains caught between statutory mandates designed for advanced fuels and market realities driven by conventional corn ethanol. Congress faces pressure to either reform the program's underlying structure or accept that the Renewable Fuel Standard will continue falling short of its original climate and innovation goals.
Access the Legis1 platform for comprehensive political news, data, and insights
Spot something wrong? Report an issue with this article