Updating and imposing new regulations for any sector is essential to ensuring a successful future, and that sentiment extends to the energy sector. Now, the AFPM, or the American Fuel & Petrochemical Manufacturers, has submitted comments to the EPA, or the Environmental Protection Agency, regarding its proposed supplemental rulemaking to the 2026-2027 Renewable Fuel Standard. The EPA has become a vestige of the US energy industry and regularly proposes changes to mandates and regulatory standards for US energy generation.
The EPA has added an addendum to its June RFS proposal, which has been lamented by the AFPM
The EPA has a somewhat controversial reputation in the US energy industry as it regularly delivers bad news for energy companies and petroleum producers. In June, the EPA released its initial RFS proposal, but recently amended it as it seeks to add to the already historic 2026-2027 RFS biofuel blending mandates.
The EPA has stated that the plan is to waive RFS costs from certain refineries over the period between 2023 and 2025 for the next tranche of RFS obligations. Renewable Fuel Standards were initially created by Congress way back in the mid-2000s, and the aim was and still is to reduce greenhouse gas emissions and expand the United States’ renewable fuel sector while also reducing reliance on foreign oil imports. Sounds good, right? Not according to some.
The AFPM has lamented the proposal by the EPA, pointing to the incredible compliance costs in the future
While some might view the RFS proposal as a step in the right direction, the AFPM has noted that by reallocating the RFS mandate, the energy industry’s compliance costs will skyrocket beyond the already historic expenses we are already seeing, noting that the estimation is already sitting at an astonishing $150 billion for 2026/27. The EPA released a statement that kicks the can of responsibility back down the Presidential line to the previous administration.
“This proposal is an important step in the EPA’s tireless work to repair the damage done after four years of the Biden-Harris Administration neglecting key components of the RFS program, including threats to transform the RFS program into a subsidy for electric vehicle charging stations as part of a larger strategy to electrify the transportation sector. – EPA statement on RFS reallocation
Reallocation would raise the RFS well beyond what the market claims is acceptable
The American Fuel & Petrochemical Manufacturers has lamented the move proposed by the EPA to reallocate RFS, and has stated that the reallocation will raise biofuel feedstock costs and force the United States to continue to rely on foreign imports, the polar opposite of what the RFS is designed to do. The AFPM has noted that the EPA’s reallocation mandate will significantly increase soybean oil costs, thereby raising RFS compliance costs to record levels.
If that does happen, market analysts have noted that the total RFS costs, which we should mention are paid by American consumers and refiners, will increase from the projected $150 billion to an astonishing $190 billion over 2026 and 2027. With the latest round of sanctions on Russia placing the energy sector internationally in a precarious position, any other increases in compliance costs could negatively affect the US energy sector.
The AFPM has urged the EPA to reconsider the reallocation mandate
Following an unsuccessful summit with Vladimir Putin, US President Donald Trump imposed sanctions on Russian energy companies, forcing Lukoil, one of Russia’s substantially profitable energy companies, to divest its holdings in foreign assets. Couple that with the reallocation proposal from the EPA, and one can understand the position that the AFPM has taken. They simply state that: The only lawful, acceptable reallocation number is zero. Whether or not the EPA listens is yet to be determined.
