On March 27, 2026, EPA finalized the highest Renewable Fuel Standard (RFS) volume requirements in the program’s 20-year history. (Need an RFS refresher? Read our RFS 101 to catch up quick.)
The Set 2 Final Rule sets the bar at 25.82 billion RINs for 2026 and 25.98 billion for 2027 (increases of more than 15% from the 2023-2025 levels) with biomass-based diesel (BBD) volumes jumping 61% year-over-year, from 3.35 billion gallons to 5.40 billion gallons. The volumes represent a strong statement of support for domestic biofuel producers and the agricultural communities that supply them, reportedly exceeding what biofuel industry associations were requesting.
Whether the market can actually deliver those volumes is a different question. EPA projected total renewable fuel supply at approximately 21.87 billion gallons for 2026 – a meaningful gap with the 25.82 billion RIN obligation that will need to be bridged through the nested RIN structure. The timeline compounds the challenge: we are already one quarter through the 2026 compliance year, supply chains cannot be restructured overnight, and some obligated parties are likely to take compliance deficits rather than acquire RINs at elevated market prices.
Closing that gap will depend heavily on imports – of both finished BBD and the feedstocks that supply domestic production. The economics of that import strategy, however, have shifted materially since last year.
The 45Z Complication
Feedstock import economics are complicated by changes to the Clean Fuel Production Credit (45Z) under the One Big Beautiful Bill Act of 2025. OBBB restricts 45Z to biofuels produced from North American feedstocks and eliminates the carbon intensity advantage of imported fats, oils, and greases (FOG) by prohibiting consideration of land use change in emission rate calculations. Imported FOG no longer qualifies for 45Z, making it less cost competitive with domestic soybean oil and Canadian canola oil for compliant BBD production outside of states with LCF programs (which reward the low carbon intensity of waste feeds). EPA’s own analysis reflects lower projected volumes of imported FOG and greater volumes of North American vegetable oils in 2026 and 2027 enabled by growth in domestic crushing capacity.
SRE Reallocation, Import RINs, and eRINs
EPA finalized a 70% partial reallocation of SRE volumes from the 2023-2025 compliance years into 2026 and 2027 compliance obligations – adding approximately 0.99 billion RINs to 2026 total applicable volumes and 1.04 billion RINs to 2027. The proposed “import RIN reduction” provisions were not finalized; EPA has signaled intent to address these by 2028 through a separate rulemaking. EPA also formally removed renewable electricity as a qualifying fuel under the RFS and withdrew the December 2022 proposed eRIN rule – closing the door on a program that was proposed but never finalized or implemented. Note: No eRINs were ever generated; electric vehicles have never in practice been eligible to earn RINs. The removal eliminates a theoretical future pathway with no impact on any existing RIN market participants.
What This Means for RIN Prices
Despite removal of the import RIN reductions contained in the June 2025 proposed rule, the combination of aggressive volume requirements, SRE reallocation volumes, and constrained North American feedstock supply creates conditions for continued upward pressure on D4 and D5 RIN prices – which had already risen significantly following the June 2025 Set 2 proposal. The full RIN price picture requires simultaneous analysis of crude oil prices, feedstock economics, 45Z credit values, and state LCF program dynamics. Due to the delayed finalization of the Set 2 rule and consequent lower rate of RIN generation during this year’s first quarter, we expect some obligated parties to take compliance deficits in 2026 rather than bid up prices on the limited volume of available RINs. As a result, we project 2026 market compliance will fall meaningfully short of the final volume requirements. This, in turn, will place further upward pressure on RIN prices in 2027 as those obligated parties who carried a deficit out of 2026 are forced to cover that deficit in 2027.
Stillwater’s Updated RINs Outlook: Coming in April
Stillwater’s Carbon Crew is incorporating both the Set 2 Final Rule and forthcoming Annual Energy Outlook (AEO) data into an updated edition of our RFS Outlook to be published on Stillwater’s Carbon Market Outlooks Dashboard. The update will include revised D3, D4, D5, and D6 RIN price projections reflecting these new compliance requirements, supply constraints, and feedstock market dynamics. Subscribe today to receive our updated outlook when it goes live!
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