On March 27, 2026, the EPA finalized the most stringent Renewable Fuel Standard (RFS) requirements in the program’s 20-year history. (Need to refresh the RFS? Read us RFS 101 to catch up quickly.)
The Set 2 Last Rule sets the limit at 25.82 billion RINs for 2026 and 25.98 billion for 2027 (an increase of more than 15% from the 2023-2025 levels) with biomass-based diesel (BBD) jumping 61% annually, from 3.35 billion liters to 2 billion 3.35. These volumes represent a strong statement of support for domestic biofuel producers and the agricultural communities that supply them, reportedly exceeding what biofuel industry associations had requested.
Whether the market can supply those volumes is a different question. EPA is intended total renewable fuel supply at approximately 21.87 billion gallons for 2026 – a reasonable gap with RIN commitments of 25.82 billion that will need to be closed through the failed RIN structure. The timeline compounds the challenge: we are now one quarter to 2026, supply chains will not be reorganized, and some obligated parties may take deficits instead of acquiring RINs at higher market prices.
Bridging that gap will depend heavily on imports – of finished BBD and locally produced food. However, the economics of that import policy have changed significantly since last year.
Description of 45Z
The economics of the supply chain is complicated by changes to the Clean Fuels Production Credit (45Z) under the Better Alternative Act of 2025. The OBBB restricts 45Z to biofuels produced from North American feedstocks and eliminates the benefit of carbon intensity of imported fuels, oils and fuels (FOG) by preventing consideration of land use rate change. Imported FOG no longer qualifies for 45Z, making it cost-competitive with domestic soybean oil and Canadian canola oil for BBD-compliant production abroad through LCF (low carbon offset feedstock) programs. EPA analysis shows lower projected FOG imports and higher North American vegetable oil emissions in 2026 and 2027 fueled by growth in domestic crushing capacity.
SRE Reallocation, Import RINs, and eRINs
The EPA has completed the reallocation of 70% of the SRE volumes from the years 2023-2025 to 2026 and 2027 – it includes about 0.99 billion RINs in the 2026 total and 1.04 billion RINs to the ports in 2027. The EPA has indicated the intention to address these in 2028 through separate rulemaking. The EPA also formally removed renewable electricity as a qualifying fuel under the RFS and withdrew the proposed December 2022 eRIN rule — closing the door on a program that was planned but never completed or implemented. Note: No ERINs are ever generated; electric vehicles have never been eligible for RINs. The removal eliminates a hypothetical future path that has no impact on any existing RIN market participants.
What This Means for RIN Prices
Despite the removal of RIN discounts from the June 2025 proposed rule, the combination of strong volume requirements, SRE allocation volumes, and North American food supply shortages are creating conditions of continued pressure on D4 and D5 RIN prices – which had already risen significantly after the June 2025 Set 2 production. one of crude oil prices, feedstock economics, the quality of 45Z loans, and the strength of the LCF program. Due to the delay in finalizing the Set 2 rule and the low rate of RIN production during the first quarter of this year, we expect that the obligated parties will take the reductions to comply with the Set 2 rules in 2026 rather than raising prices with the limited volume of available RINs. As a result, we predict that the market regulations of 2026 will be clearly lacking to meet the final sound requirements. This, in turn, will put additional pressure on RIN prices in 2027 as obligated parties with shortfalls from 2026 are forced to cover that shortfall in 2027.
Outlook for updated Stillwater RINs: Coming in April
Stillwater’s Carbon Crew includes the Set 2 Final Rule and upcoming Annual Energy Outlook (AEO) data in an updated edition of our RFS Outlook that will be published at Stillwater’s. Carbon Market Outlooks Dashboard. The update will include updated D3, D4, D5, and D6 RIN estimates that reflect these new compliance requirements, supply constraints, and feedstock market dynamics. Register today to welcome our updated vision when it first launches!
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