On Friday, the U.S. EPA released a proposed rule to establish required annual volumes for the transportation market in 2026 and 2027 – known as renewable volume obligations (RVOs) – under the Renewable Fuels Standard (RFS). As a reminder, while heating oil is not a regulated fuel under the RFS and therefore not subject to the requirements of the program, qualified renewable fuels used in the heating oil market are still eligible to generate credits under the program, known as Renewable Identification Numbers (RINs).

The volumes established under the RFS are important because they affect overall supply and demand for biofuels in the United States. RVOs lower than production capacity can suppress the market, while higher RVOs can increase demand for biofuels and related feedstocks. Here are the EPA's proposed volumes for 2026 and 2027 (note that the category "biomass-based diesel" (BBD) includes biodiesel and renewable diesel):

NEFI is pleased that the proposal would set 5.61 billion gallons for 2026, increasing to 5.86 billion gallons in 2027. These figures exceed the 5.25 billion gallons recommended by a broad coalition of biofuels stakeholders and U.S. oil industry partners, including NEFI, which sent a letter to the EPA and met with the agency to express support for volumes needed to supply demand in the heating oil sector. The proposal does not address hardship exemptions for small refiners, which could affect overall volumes. The EPA said this may be accounted for in the final rule.

The EPA is also proposing major changes to the RFS program – some of which are controversial. For example, beginning January 1, 2026, the rule would reduce the number of RIN credits generated by imported biofuels and related feedstocks to 50% of current levels. Additionally, the proposal appears to introduce new reporting and legal requirements that may affect the heating oil market. NEFI is reviewing details and intends to file public comments as appropriate.

It's important to emphasize that this is a proposed rule and is not final. The EPA has opened a public comment period through August 8, 2025, and a public hearing is scheduled for Tuesday, July 8. This is a critical opportunity for our industry to voice concerns and advocate for necessary adjustments.

For more information on this issue, contact NEFI President & CEO Jim Collura at jim.collura@nefi.com