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Refiners granted highest level of biofuel waivers since 2017
SREs get 1.76 billion credits for the 2025 compliance year
A tanker truck outside a biorefinery in Gowrie, Iowa. (Daniel Acker/Bloomberg)
Key Takeaways:
- The EPA granted small refinery exemptions totaling 1.76 billion credits for 2025, the largest relief from renewable fuel blending mandates since 2017.
- The exemptions exceeded prior projections and shift compliance costs to other refiners through reallocation, aiming to preserve biofuel demand for farmers.
- EPA plans a proposal before November to reallocate exempted volumes into 2026 and 2027 mandates as refiners and biofuel groups debate the policy.
The Trump administration granted smaller oil refineries the biggest number of exemptions from mandates requiring them to blend renewable fuels since 2017.
While the exemptions offer significant relief to some refiners, the administration is seeking to blunt the fallout for farmers ahead of midterm elections by making up for the lost biofuel demand through eventually higher blending requirements elsewhere.
The approach underscores the difficult balancing act for Trump between the oil and agriculture industries, two important constituencies with competing demands on biofuel policy. The result is a compromise that gives refiners billions of dollars worth of breaks while softening the blow to producers of ethanol and biodiesel. Larger oil companies, however, may be left with a heavier burden.
The Environmental Protection Agency gave so-called small refinery exemptions, or SREs, totaling 1.76 billion credits for the 2025 compliance year, after a week of turmoil in the industry as rumors circulated on what the numbers would be. That’s significantly higher than a previous projection from the agency for about 990 million in exempt credits.
The EPA also announced it will essentially force refiners that didn’t receive breaks to pay for those that did in a process called reallocation, which has been a sore point for the oil industry. The agency said it would propose to reallocate 100% of the difference between projected and actual exempted volumes for 2025 breaks into the 2026 and 2027 mandates, with a proposal expected before November.
Geoff Cooper, president of the Renewable Fuels Association, said the announcement creates a pathway for ensuring no net loss in biofuel demand.
While most of @EPA's newly announced #RFS exemptions aren't justified, we’re somewhat encouraged that the agency is minimizing the damage through reallocation. It's critically important that they move quickly to faithfully implement their approach.https://t.co/kRB2tLPmZH
— Renewable Fuels Association (@EthanolRFA) August 31, 2026
“While we continue to believe most of the SREs issued today are completely unjustified, we are somewhat encouraged that EPA is taking steps to minimize the damage through reallocation,” he said in a statement.
The Renewable Fuel Standard program, which was created by Congress two decades ago to bolster domestic demand and support rural communities, requires refiners to blend a certain amount of biofuels into gasoline and diesel.
Many companies, rather than blending biofuels like ethanol and biodiesel themselves, buy tradeable credits — so-called renewable identification numbers, or RINs — from those that do. Those credits have spiked in price this year after the Trump administration set record-high blend quotas and as war in the Middle East strained global fuel supplies.
Eighteen refineries received full exemptions, while 11 received partial, three were denied and two were deemed ineligible, according to the rule. Chevron Corp.’s Salt Lake Refinery got a full exemption, as well as four Delek U.S. Holdings Inc. refineries. Marathon Petroleum Corp.’s Mandan Refinery won a partial exemption.
Shares of Chevron and Delek rose more than 2% on the exemptions, while crop traders Archer-Daniels-Midland Co. and Bunge Global SA clawed back earlier declines on the reallocation news.
Farm-state Republican lawmakers, typically supportive of Trump’s agriculture and energy agenda, had warned the administration in unusually blunt terms earlier this month to limit changes to biofuel mandates important to growers in their states.
“You can expect I will work to hold the White House to its commitment of full reallocation,” Sen. Chuck Grassley (R-Iowa) said in a statement after the announcement.
The ruling will affect costs for oil companies in complying with the U.S. biofuel-blending mandate. Biofuel producers and growers have opposed them, arguing the exemptions threaten to curb demand for their products — as well as the corn and soybean used to make them — at a time when farmers are struggling with high costs of inputs like fertilizer and ballooning harvests.
The administration has been seeking to find a balance as different factions argue over policy. One group that was left dissatisfied with the decision was the oil and gas lobbying group American Petroleum Institute, which has opposed exemptions for small refiners and any reallocation.
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“Widespread small refinery exemptions, especially with reallocation, distort the fuels market by creating an uneven playing field,” Dustin Meyer, senior vice president of policy, economics and regulatory affairs at API, said in a statement.
Bloomberg News reported last week that Trump is planning to meet with U.S. oil refining executives Sept. 1 as he confronts persistently high gasoline prices stoked by the war in Iran. While the session is set to be wide ranging, it’s also expected to provide an opening for some refiners to raise their concerns over biofuel-blending quotas.
