Glacier FarmMedia — Canada’s canola sector is pumped about a long-awaited biofuel policy decision in the United States.
The U.S. Environmental Protection Agency has announced its final Renewable Volume Obligation (RVO) blending rule for biomass-based diesel.
The EPA set the blending mandate for biodiesel and renewable diesel to 5.4 billion gallons in 2026 and 5.5 billion gallons in 2027.
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That is a 61 to 64 per cent increase over the 2025 level of 3.35 billion gallons.
“We’re very pleased to see those updates, and Canadian canola can make a meaningful contribution there,” said Canola Council of Canada president Chris Davison.
WHY IT MATTERS: The U.S. is the biggest buyer of Canadian canola oil.
He has not yet seen the EPA’s official regulatory text, but based on the agency’s announcement, there does not appear to be anything preventing Canadian canola oil from helping to meet the feedstock demand for the new RVOs.
“Canola is a modest but important feedstock in U.S. biomass-based diesel production,” said Davis.
The new RVOs should create an “appreciable opportunity” for Canada’s canola crushers who have greatly increased production capacity in recent years.
U.S. oilseed groups were thrilled with the EPA’s announcement.
The American Soybean Association said soybean farmers needed a win to boost domestic markets, and U.S. president Donald Trump’s administration delivered “in a big way.”
“The 2026-27 RVOs will increase soybean oil use, boost U.S. soybean processing and grow domestic biofuel markets for our crop,” ASA president Scott Metzger stated in a press release.
The final rule also reallocates 70 per cent of retroactive small refinery exemption volumes dating back to 2016 back into the blending pool to support additional biofuel production and soybean demand.
The only letdown for U.S. soybean growers was that they did not get their wish for the rule to prioritize domestically sourced biofuel feedstocks in 2026 and 2027.
EPA to reduce credits for imported biofuel, feedstocks
However, the EPA announced that it will reduce credit generation for imported biofuels and biofuel feedstocks by half, beginning in 2028.
If the EPA lives up to that promise, it would serve as a significant additional economic driver for the U.S. soybean sector, according to the association.
Davison is not sure what the EPA means by imported biofuel and feedstocks. At one point, the agency was considering a proposal to create a ring fence covering all of North America, and anything outside that zone would be considered imported.
He needs to see the details of the regulation to figure out what the EPA is considering for 2028.
The U.S. biofuel industry accounts for more than half of all U.S. domestic soybean oil consumption.
Clean Fuels Alliance America noted that biodiesel and renewable diesel facilities were forced to shut down or run far below previous year levels in 2025 due to market uncertainty.
U.S. biodiesel production declined by one-third compared to 2024 levels.
“The robust biomass-based diesel volumes set in this rule support America’s farmers and consumers,” Kurt Kovarik, Clean Fuel’s vice-president of federal affairs, stated in a press release.
Demand from the biodiesel and renewable diesel sector accounts for 10 per cent of the value of every bushel of U.S. grown soybeans.
The National Oilseed Processors Association called it a “landmark rule” that provides certainty and confidence for American farmers and processors.
“The historic volumes for biomass-based diesel, the 70 per cent reallocation of waived gallons, and the commitment to account for SREs (small refinery exemptions) on a go-forward basis, restores program integrity and puts the RFS (renewable fuel standard) back on a growth trajectory,” association president Devin Mogler said in a press release.
