ACE has been actively engaging the new administration on the importance of increasing domestic use of American ethanol as the key to ensure our members are not harmed by the tariff trade war.
Obviously, the quickest way to increase domestic ethanol use is through E15 year-round, and steps are being taken to once and for all achieve that goal this year. The other near-term action the administration can take is to increase renewable volume obligations (RVOs) under the RFS.
For two decades, the RFS has promoted U.S. energy security and economic growth. After enacting the original RFS in 2005, Congress significantly expanded it in 2007 to counteract an economic downturn in rural America. The positive results were immediate. As demand for U.S. crops increased, net farm income nearly doubled between 2007 and 2013 and more than 200 ethanol facilities were built, creating high-skill, high-wage jobs in rural America.
But today, American farmers are once again trapped in a price-cost squeeze. According to the National Corn Growers Association, many corn farmers are forecast to experience their third consecutive year of net profit losses in 2025, projected to lose more than $160 per acre on average.
This spring, EPA Administrator Zeldin is set to propose RVOs for 2026 and 2027, with plans to finalize the blending requirements by the end of the year. Given the Administration’s focus on unleashing American energy, and to counteract damage to corn and ethanol export markets from the ongoing tariff and trade war, now is the perfect time for EPA to increase the RFS, ensuring that conventional biofuel volume significantly exceeds the 15-billion-gallon floor for both 2026 and 2027.
Administrator Zeldin also has a critical decision to make about small refinery exemptions (SREs). By law, any physical gallons of renewable fuel represented by SREs must be reallocated to larger, non-exempt refiners to prevent “leakage” and maintain the overall renewable volume obligations of the RFS.
The first Trump administration issued SREs in a retroactive manner, after the final RVOs had been established. This approach not only reduced the effective blending obligations, it lowered prices for renewable identification numbers (RINs) which discouraged sales of E15 and higher ethanol blends. ACE and others have challenged this approach in the courts.
The stakes are high because more than 160 SRE petitions are currently pending at EPA, representing approximately 5 billion gallons of blending obligations.
Our message to EPA is clear: increase RFS blending targets far above 15 billion gallons for 2026 and 2027 to improve economic conditions in rural America and compensate for potential export market loss, and if EPA chooses to issue any SREs, any exempted volumes must be reallocated so overall blending obligations remain intact.