The U.S. Environmental Protection Agency’s (EPA) proposed Renewable Volume Obligations (RVOs) for 2026 and 2027 have the potential to be a game changer for agriculture.
The EPA’s proposed rule, which comes under the Renewable Fuel Standard (RFS) – and named the Set 2 Rule – would increase biomass-based diesel requirements, from 3.35 billion gallons in 2025 to 5.61 billion gallons in 2026, supporting American row-crop growers in the process.
“It creates a great opportunity to move from 3.35 to 5.61; it’s a massive increase,” says Caleb Ragland, a Kentucky farmer and president of the American Soybean Association (ASA).
“We have long lobbied for giving the American farmer a chance to sell American soybeans. Crush them here, use the oil to make American fuel and keep our economy going, ” Ragland told AgriTalk host Michelle Rook, on Wednesday.
Three Regulatory Takeaways
There are at least three key regulatory shifts that would accompany the volume increases:
1. Heightened quotas for cellulosic biofuel, biomass-based diesel (BBD), and advanced biofuels.
2. Prioritization of soybean oil and ethanol produced in the U.S. Imported biofuels would earn just 50% of the Renewable Identification Number (RIN) value compared to U.S.-based fuels.
3. Removal of renewable electricity (eRINs) as a qualifying fuel, reinforcing liquid biofuels as the Renewable Fuel Standard centerpiece.
In a press release, EPA said that these measures will cut U.S. oil import reliance by roughly 150,000 barrels per day across 2026 and 2027, backing domestic biofuel producers and strengthening rural economies.
“This [proposed rule by EPA] is not only good for farms, it’s good for rural communities. All of that trickles down and stays here in America. It’s a wonderful thing,” Ragland says.
An Update And Outlook On 45Z
The 45Z Clean Fuel Production Tax Credit was one of the few Inflation Reduction Act (IRA) incentives spared in the House’s proposed budget reconciliation bill. That’s likewise the case in the Senate. Both versions extend 45Z from 2027 to 2031.
“That’s a huge win … that certainly gives us a little bit of certainty in the world of uncertainty we’re living in right now,” Amy France, a Kansas farmer and chair of the National Sorghum Producers, said on AgriTalk.
Ragland agrees but noted ASA is concerned about some “last-minute” changes that are being proposed in the Senate version regarding the 45Z tax credit and foreign feedstocks.
While the House version modifies 45Z to prevent the use of certain foreign feedstocks outside of North America, such as used cooking oil, the Senate committee’s proposal allows use of feedstocks outside the U.S. but cuts the tax credit by 20%.
“We want to encourage that to get reversed … there’s no reason to give American dollars as tax credits to foreign entities that are bringing in foreign used cooking oil,” Ragland says. “We need to get that ironed out, and hopefully we will, but, but overall, there’s great opportunity here.”
France says she is encouraged by the extension granted 45Z. “We were thrilled to hear EPA specifically calling out sorghum as a dependable, low-cost biofuel feedstock. It just goes to show that recognition for sorghum and the realm we’re playing in today.”
Ragland and France weigh in on a variety of additional topics – from trade to state of current crops across the country to the need for a new Farm Bill – on this segment of AgriTalk. Listen to it here:
