URBANA, IL. (RFD NEWS) — New federal biofuel mandates are set to increase demand for U.S. crops, providing stronger market support for corn and soybean producers over the next two years.
The Environmental Protection Agency (EPA) finalized its Renewable Fuel Standard “Set 2” rule, establishing 2026 and 2027 blending requirements at the highest levels in program history. The rule maintains a 15 billion-gallon conventional biofuel target, supporting ethanol demand, while significantly expanding biodiesel and renewable diesel requirements.
EPA estimates that biodiesel and renewable diesel use will need to rise by more than 60 percent from 2025 levels. That increase is expected to drive additional demand for soybean oil and other feedstocks, strengthening prices and supporting farm income. USDA officials estimate the rule could add $3 to $4 billion in net farm income and generate $31 billion in crop value tied to biofuel production.
The policy also aims to reduce U.S. reliance on foreign oil by roughly 300,000 barrels per day while supporting rural economies and domestic energy production.
In the longer term, changes beginning in 2028 will prioritize U.S.-produced biofuels over foreign feedstocks, further reinforcing domestic demand.
On the other hand, the EPA’s final renewable fuel rule for 2026 and 2027 is expected to sharply tighten the D4 biomass-based diesel credit market.
A new Farmdoc Daily analysis says the rule sets up a major jump in required D4 RIN generation and could reshape biomass-based diesel production and feedstock demand over the next two years.
The report says the required D4 net RIN generation must rise from 7.10 billion gallons in 2025 to 10.99 billion in 2026 and 11.89 billion in 2027. That would mark increases of 55 percent and 67 percent from the 2025 level.
The biggest driver is the biomass-based diesel mandate itself. The applicable biomass-based diesel requirement rises from 5.42 billion gallons in 2025 to 9.07 billion in 2026 and 9.20 billion in 2027.
The analysis also says ethanol credits 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 leaves much less cushion in the system. The report projects that the D4 and D5 banks will fall to minimal levels by 2026, making soybean oil and other feedstock markets more sensitive to production shortfalls.
READ MORE: www.farmdocdaily.illinois.edu
