Recent developments across production data, legislative activity, and federal budgeting point to a dynamic period for the U.S. renewable fuels market. New federal data highlights strong ethanol output and export demand, while lawmakers and regulators continue to debate policy changes that could reshape Renewable Fuel Standard (RFS) compliance in the years ahead.
New data from the U.S. Energy Information Administration (EIA) shows that U.S. fuel ethanol production reached a record high at the start of 2026, averaging 1.196 million barrels per day. The report also noted increases in ethanol inventories and exports, with shipments rising by approximately 5 percent compared to the prior period. Ethanol stocks climbed to more than 24 million barrels, signaling strong domestic supply alongside sustained global demand. Looking ahead, the EIA expects production levels to remain steady through 2026 and 2027, with average output projected between 1.07 and 1.08 million barrels per day over the next two years.
At the same time, U.S. lawmakers are advancing a legislative package aimed at expanding the market for corn-based ethanol by authorizing year-round, nationwide sales of E15 gasoline. The proposal also seeks to tighten eligibility for small refinery exemptions (SREs) under the RFS. Under the draft language, exemption eligibility would be limited to companies that process fewer than 75,000 barrels of crude oil per day across all facilities, rather than the current standard, which applies on a per-refinery basis regardless of parent company size. The proposal would also prohibit reallocation, a mechanism that shifts waived blending obligations to larger refineries which is an approach the EPA has previously proposed.
The draft legislation has sparked debate across the industry. Some renewable fuel advocates argue that the current SRE process undermines the integrity of the RFS. “Some refining companies claiming to be small refineries have tried over and over again to avoid complying with the RFS because less biofuel in America’s fuel mix means more money for them,” said Emily Skor, Chief Executive Officer of Growth Energy. “But refiners can’t have it both ways, claiming ‘disproportionate economic hardship’ to the EPA while reporting exceptional financial performance to the SEC.” Others, however, warn that further restricting SRE eligibility could negatively impact refiners and raise costs for consumers. Eric Zimpfer, Head of Downstream at Cenovus Energy, noted that “The current proposal unfortunately harms small refineries, which are economic engines in their communities, providing transportation fuels, asphalt and other products to American consumers while delivering high-paying jobs and supporting local business.”
On the regulatory front, the Senate recently approved $8.8 billion for the EPA’s fiscal year 2026 budget. Included in the funding is $27 million dedicated to renewable fuels research, including work on landfill emissions and PFAS. The budget proposal also directs the EPA to submit a report within 90 days outlining its approach to eRINs under the RFS program. Additionally, the agency is also required to determine whether fuels derived from plastic waste or tires will be included in the RFS and to report its decision within 30 days.
Taken together, these developments underscore a period of strong ethanol production paired with ongoing policy and regulatory debates that could significantly influence the future of the RFS. As lawmakers consider changes to blending rules and exemption eligibility and regulators assess new fuel pathways, renewable fuel producers, refiners, and obligated parties will be closely watching how these decisions shape compliance strategies and market dynamics moving forward.
Stay Ahead of RFS Policy and Market Shifts
Strong ethanol production, rising exports, and renewed legislative activity are shaping the next phase of Renewable Fuel Standard compliance. Record production levels, proposals to expand year-round E15 sales, potential changes to small refinery exemption eligibility, and new EPA budget directives all signal meaningful impacts for renewable fuel producers, refiners, and obligated parties as they plan for 2026 and beyond.
RINSTAR tracks these developments closely and translates them into practical compliance insights. By subscribing to our newsletter and following the RINSTAR blog, you can stay aligned with the latest updates on:
- Ethanol production, inventory, and export trends influencing RIN supply
- Legislative proposals affecting E15 availability and SRE eligibility
- EPA budget decisions and regulatory priorities, including eRINs and new fuel pathways
- RFS policy updates that may affect blending obligations and compliance planning
Have questions about how these production trends or policy proposals could affect your RFS compliance strategy?
📩 Contact us at services@cfch.com or schedule a personalized RINSTAR demo to see how we can help streamline your compliance requirements and manage RINs effectively and accurately.