The Renewable Fuel Standard (RFS) is one of the most influential transportation energy policies in the country. It shapes what fuels are produced, how much biofuel is blended into the nation’s fuel supply, and the market outlook for farmers, refiners, and clean fuel producers, including many here in Michigan.
At the same time, the RFS can be an overwhelming alphabet soup of acronyms and technical decisions that can feel far removed from day-to-day state and fleet-level work.
But as the U.S. Environmental Protection Agency (EPA) prepares to finalize major decisions for 2026 and 2027, the RFS carries real implications for Michigan fleets, fuel suppliers, agricultural producers, and clean fuel investors. That’s why we’re breaking down what the RFS is, why it matters, and what to watch in the months ahead.
What the RFS Is
The RFS is a federal policy that has been in place for 20 years. It requires a specific volume of renewable fuels like ethanol, biodiesel, and renewable diesel, to be blended into U.S. transportation fuels each year.
The program has several key components:
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Annual volume requirements (RVOs): Each year, EPA sets the total number of gallons of renewable fuel that must be blended nationwide.
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Renewable Identification Numbers (RINs): Each gallon of qualifying biofuel generates a tradable credit used by refiners and fuel importers to demonstrate compliance.
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Fuel categories: The RFS establishes separate targets for different fuel types, including conventional ethanol, biomass-based diesel, and advanced biofuels.
Together, these elements create a national market signal for renewable fuels and ensure they remain a part of the U.S. transportation fuel mix.
Why the RFS Is Important
The RFS is one of the most consequential federal policies connecting transportation, agriculture, and energy markets.
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It drives demand for domestic agriculture. Biofuels rely heavily on U.S.-grown feedstocks such as corn, soybeans, canola, and animal fats. Strong RFS volumes support rural economies and agricultural producers nationwide.
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It expands the market for cleaner, domestically produced fuels. By setting a baseline for renewable fuel blending, the RFS helps diversify the fuel supply, support U.S. energy production, and reduce reliance on imported petroleum.
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It encourages investment and innovation. Stable volume targets give producers confidence to build new facilities, upgrade existing plants, and scale production for newer fuels like renewable diesel and sustainable aviation fuel.
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It influences fuel prices and fleet economics. RIN values are a key part of the economics of producing and blending renewable fuels, directly affecting the competitiveness of biodiesel, renewable diesel, and ethanol.
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It balances the needs of farmers, refiners, and consumers. Few federal programs are as closely watched across agriculture, refining, and transportation as the RFS, underscoring its broad economic impact.
Current Status: What’s Happening Now
EPA is in the middle of one of the most consequential RFS rulemakings in years. The agency is finalizing renewable volume requirements for 2026-2027 and determining how to handle Small Refinery Exemptions (SREs).
EPA released a proposed rule in mid-2025, followed by a supplemental proposal in September. The final rule is expected in late 2025 or early 2026, though the timing remains uncertain.
SREs remain a major variable. EPA recently resolved a large backlog of exemption petitions, granting a mix of full and partial exemptions to small refineries that claimed it would be too difficult to comply with the regulation. If the gallons waived through these exemptions are not reallocated, total demand for renewable fuels declines.
EPA is considering whether to require 100% reallocation, 50% reallocation, or something in between.
What We’re Still Waiting For
Several key decisions remain outstanding:
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Final RVO rule: Establishing national blending volumes for 2026 and 2027.
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Final SRE reallocation policy: A decision that could shift billions of gallons of demand for ethanol, biodiesel, renewable diesel, and other renewable fuels.
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RIN market response: RIN prices are highly sensitive to final volume and exemption decisions and can change quickly once the rule is finalized.
Until the EPA resolves both the volume targets and exemption treatment, farmers, clean fuel producers, refiners, fleets, and fuel buyers will continue to face uncertainty around future demand and compliance costs.
For deeper analysis and ongoing updates, we encourage readers to explore the excellent RFS resources provided by national associations such as Clean Fuels Alliance America and the Renewable Fuels Association.