New rules for US refineries could reshape the biofuel market

The U.S. House of Representatives has approved the Nationwide Consumer and Fuel Retailers Choice Act, introducing significant changes to the Small Refinery Exemption (SRE) programme. The bill also allows year-round sales of E15 gasoline, marking a notable shift in U.S. fuel policy aimed at expanding ethanol blending in the transportation sector.

The legislation passed with a 218–203 vote and restructures the SRE framework, which currently allows small oil refineries to waive part of their Renewable Fuel Standard (RFS) obligations or avoid purchasing Renewable Identification Numbers (RINs). Under the new rules, starting in 2028, small refineries would automatically receive a 75% exemption from Renewable Volume Obligations (RVOs), while the Environmental Protection Agency (EPA) would be restricted from reallocating waived volumes across the system.

The bill also redefines the criteria for what qualifies as a small refinery, which the Congressional Budget Office (CBO) expects to reduce the number of eligible facilities compared to the current programme. At the same time, some at-risk refineries could still qualify for full exemptions, while others would be subject to the automatic partial relief.

Industry stakeholders warn that changes to the SRE system could significantly affect renewable fuel demand, as exemptions have historically reduced blending obligations and created uncertainty for farmers and biofuel producers. The impact is expected to be particularly strong in the biomass-based diesel segment, which relies heavily on feedstocks such as soybean oil and other fats and oils.

According to market projections, U.S. biomass-based diesel volumes are set to reach 8.86–9.20 billion gallons in 2026–2027, while advanced biofuels are expected to exceed 10.8–11.3 billion gallons, depending on SRE adjustments. Growth in the sector is driven by expanding renewable diesel capacity and rising demand for low-carbon fuels.

The bill now moves to the U.S. Senate for consideration, where it must be approved before becoming law.

Tags: biofuel, USA, legislation