Clean Fuels supports EPA’s proposal to reallocate SREs in 2026 and 2027

In a virtual public hearing held yesterday, key figures from the clean fuels industry gathered to voice their support for the Environmental Protection Agency's (EPA) proposal to reallocate Small Refinery Exemptions (SREs) for the years 2026 and 2027. Among those testifying were Kurt Kovarik, Vice President of Federal Affairs at Clean Fuels, Kate Shenk, Director of Regulatory Affairs, and Kent Engelbrecht, Chair of the Governing Board. Their collective testimony underscored the importance of timely regulatory action to bolster the clean fuels market and ensure stability in fuel supplies.

What Happened

In April, the EPA released its final rule regarding the Renewable Fuel Standards (RFS) for 2026-2027, estimating that small refinery exemptions for 2025 would total around 990 million Renewable Identification Numbers (RINs). However, in August, the EPA granted exemptions that totaled a staggering 1.76 billion RINs, prompting a significant shift in the market landscape. Recognizing the potential impact of these exemptions, the EPA proposed to add supplemental volumes to the RFS, aiming to reallocate 100% of the difference between its April estimate and the August final action.

The Clean Fuels organization stands firmly behind this proposal, advocating for the supplemental volume to be evenly distributed between the 2026 and 2027 obligations. Kovarik emphasized the urgency of finalizing this supplemental rule before the year's end, stating, "We ask the agency to finalize this supplemental rule as soon as possible—certainly by the end of the year—to ensure that the robust volumes for 2026 and 2027 are not eroded by small refinery exemptions, past or future."

This reallocation is not merely a regulatory detail; it represents a critical step towards stabilizing the clean fuels market and maintaining the momentum that has been built over the past year. The clean fuels sector has been pivotal in driving investments in rural America, creating jobs, and enhancing the country's energy supply.

Community Reaction

The response from the community has been overwhelmingly positive, particularly among local producers and stakeholders in the renewable energy sector. Shenk highlighted the potential market impacts of any delays in finalizing the rule, drawing parallels to the chaos seen when the SREs were granted in August. She asserted, "Timely action before the end of the year will be crucial to address diesel supplies and prices." The community recognizes that the stability of the RFS program is essential for their operations and future growth.

Local businesses, especially those involved in biodiesel and renewable diesel production, are keenly aware of how regulatory decisions can affect their bottom line. The clean fuels industry has been proactive in ramping up production in response to regulatory changes, as evidenced by their reaction to the Set 2 Rule finalized in April. The anticipation of new investments and jobs is palpable, with many eager to see how the proposed reallocation will influence the market.

Voices from the Industry

Industry leaders echo the sentiments of community members. Kovarik noted, "The clean fuels industry is delivering on the goals for the RFS—making investments in rural America, creating new jobs, and massively increasing America’s energy supply." This commitment to growth and sustainability resonates deeply within the community, reinforcing the idea that a thriving clean fuels sector is not only beneficial for the environment but also for local economies.

What's Next for Clean Fuels

The proposed reallocation represents a crucial turning point for the clean fuels industry, but what happens next is equally important. The EPA's decision to finalize the supplemental rule will have far-reaching implications for both producers and consumers alike. As Kovarik emphasized, the stability of the RFS program is vital for the industry’s continued success.

Looking ahead, stakeholders are hopeful that the EPA will act swiftly to finalize the proposed reallocation. The timeline for this decision is critical; any delays could lead to uncertainty in the market, affecting diesel supplies and prices. As Shenk pointed out, the clean fuels industry has shown its capacity to respond to regulatory changes, and a timely finalization of this rule will enable producers to make necessary adjustments to their operations.

Moreover, the community is encouraged by the potential for new investments in capacity, as U.S. companies throughout the biodiesel, renewable diesel, and Sustainable Aviation Fuel (SAF) supply chain have already announced plans for expansion. This optimism is rooted in the belief that a stable regulatory environment will continue to foster growth and innovation in the clean fuels sector.

Impact on Local Economy

The implications of the EPA's proposed reallocation extend beyond the clean fuels industry; they have the potential to significantly impact the local economy. As investments in renewable energy continue to grow, job creation in the sector will follow suit. The clean fuels industry is not just about producing energy; it's about building a sustainable future for communities across the nation.

With the anticipated increase in production capacity, local businesses are expected to benefit from the influx of jobs, which can lead to a more stable economy. The ripple effects of these investments will be felt throughout the community, as families find employment opportunities and local businesses thrive. This is particularly important in rural areas, where economic growth can be more challenging to achieve.

Strengthening Community Bonds

Furthermore, the growth of the clean fuels sector aligns with traditional family values that emphasize hard work, commitment, and community support. As families secure stable jobs, they are better positioned to invest in their homes and neighborhoods, fostering a sense of belonging and community cohesion. The clean fuels industry, therefore, plays a vital role in not just the economy but also in strengthening the fabric of society.

Conclusion: A Bright Future Ahead

As the clean fuels industry rallies behind the EPA's proposal to reallocate SREs for 2026 and 2027, the community stands on the brink of a transformative period. The potential for increased investments, job creation, and economic stability paints a bright future for Fargo and beyond. With the right regulatory support, the clean fuels sector can continue to thrive, making significant contributions to both the environment and local economies.

As stakeholders await the EPA's final decision, the hope is that timely action will pave the way for a sustainable and prosperous future. The clean fuels industry is poised to deliver on its promises, and with the community's support, it can achieve its goals of fostering growth, creating jobs, and ensuring a cleaner energy supply for generations to come.