The EPA has finalized its Renewable Fuel Standard "Set 2" rule, setting 2026 and 2027 blending targets at the highest levels in the program's history and boosting demand for U.S. crop-based biofuels. The rule holds the conventional ethanol target steady at 15 billion-gallon ethanol while significantly expanding mandates for biodiesel and renewable diesel, a move that will support corn and soybean markets over the next two years. Regulators say the change is intended to cut reliance on foreign oil and bolster domestic energy production and rural economies.
USDA estimates tied to the rule point to measurable farm-level gains, with officials projecting the policy could add $3 to $4 billion in net farm income and generate roughly $31 billion in crop value connected to biofuel production. The EPA also estimates the policy will reduce U.S. crude imports by about 300,000 barrels per day. The rule includes provisions beginning in 2028 to prioritize U.S.-produced biofuels and feedstocks over foreign-sourced inputs.
A Farmdoc Daily analysis warns the final rule will sharply tighten the D4 biomass-based diesel credit market, creating immediate market pressure. Required D4 net RIN generation jumps from 7.10 billion gallons in 2025 to D4 RINs 10.99b in 2026 and 11.89 billion in 2027, increases of roughly 55 percent and 67 percent versus 2025 levels. That escalation removes much of the buffer traditionally provided by RIN banking and credit trading.
D4 market pressure
The biomass-based diesel mandate itself climbs substantially, with the applicable requirement rising from 5.42 billion gallons in 2025 to Biomass diesel 9.07b gallons in 2026 and 9.20 billion in 2027. Farmdoc's analysis says ethanol RINs will not fully cover conventional fuel obligations, forcing about 1.42 billion gallons of D4 use in 2026 and 1.41 billion in 2027 to fill the gap. That combination tightens feedstock demand for soybean oil, used cooking oil and other inputs for biodiesel and renewable diesel producers.
Analysts warn the D4 and D5 credit banks are likely to fall to minimal levels by 2026, leaving the biomass-based diesel sector and feedstock markets sensitive to production shortfalls or supply disruptions. Higher mandates should support prices for soybeans and other oilseeds in the near term, but limited RIN cushion raises the potential for sharper price swings if processors or refiners encounter operational issues.
Implications for producers
For soybean and corn growers, the rule reinforces a policy-driven floor to domestic demand for oilseeds and ethanol feedstocks through 2027 and with additional domestic preference starting in 2028. At the farm level, USDA projects the rule could add $3 to $4 billion in net farm income tied to increased biofuel production.
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