US to finalize 2026 biofuel quotas by early March and eliminate import duties

According to Reuters, citing two sources familiar with the plans, the US Environmental Protection Agency plans to finalize biofuel blending quotas for 2026 by early March, keeping them close to the original proposal and abandoning a plan to impose penalties on the import of renewable fuels and feedstocks.

If finalized, the plan would represent a partial compromise between competing oil and agricultural industry groups, maintaining the higher blending targets sought by biofuels producers and abandoning a proposal that US refiners warn would disrupt fuel markets and raise costs, according to a January 15 report.

The Environmental Protection Agency (EPA), which oversees US biofuels policy, told industry stakeholders that it intends to submit the final proposal to the White House Budget Office for review this month, with final approval expected approximately 30 days later, following White House interviews with industry representatives.

In June, the Environmental Protection Agency (EPA) proposed a total biofuel blending volume of 24.02 billion gallons (91 billion liters) in 2026 and 24.46 billion gallons (92.6 billion liters) in 2027, up from 22.33 billion gallons (84.4 billion liters) in 2025. The total included a target of 5.61 billion gallons (21 billion liters) for biodiesel, a significant jump from 3.35 billion gallons (12.6 billion liters) in 2025.

Sources told Reuters that the EPA is currently considering biodiesel blending volumes of between 5.2 and 5.6 billion gallons (19.6 and 21 billion liters) by 2026. The report states that the potential downward adjustment is partly due to the Environmental Protection Agency (EPA)’s plans to abandon a proposal that would have reduced the cost of renewable fuel credits provided by the U.S. government for imported biofuels—an “America First” policy endorsed by the soybean and biodiesel industries.

Oil industry representatives, led by the influential industry group American Petroleum Institute (API), argued that limiting credits for foreign shipments could limit fuel availability and lead to higher prices—an outcome the White House sought to avoid as fuel availability remained a central political issue ahead of this year’s midterm elections, Reuters reported.

On November 19, Reuters reported that the EPA was considering deferring consideration of the proposal for at least a year.

The EPA told Reuters that it is still reviewing comments on the proposed rule.

“As publicly stated in court documents, the agency plans to complete the transaction in the first quarter of 2026,” the agency said in a statement.

The EPA also had to decide whether larger refineries would be required to offset volumes exempted from quotas under the agency’s small refinery incentive program. This decision could significantly impact overall biofuel blending quotas, Reuters reported.

In August, the Environmental Protection Agency (EPA) resolved more than 170 small refinery permit applications dating back to 2016 and has issued additional permits since then, according to the report.

According to the report, the biofuels industry and its legislative allies are calling on the administration to require refineries to offset 100% of their untaxed gallons, while the oil industry is resisting such a requirement.

The Environmental Protection Agency is seeking comment on a range of proposals, ranging from no resource reallocation to 100%.

In September, Reuters reported that the Environmental Protection Agency (EPA) was considering a plan that would require refineries to compensate for 50% of their untaxed petroleum product output.

Tags: biofuel, USA, duties