The Renewable Fuel Standard (RFS) program was created under the Energy Policy Act of 2005 and amended and expanded by the Energy Independence and Security Act of 2007 (EISA). The RFS is a national statute, administered by the U.S. Environmental Protection Agency (EPA), that requires certain volumes of renewable fuels to be supplied to the transportation fuel market each year. The RFS requires parties supplying the market with petroleum gasoline and diesel (generally, refiners and importers) to generate or acquire Renewable Identification Numbers (RINs) proportional to the volume of gasoline and diesel supplied such that in aggregate the annual targets for renewable fuels, as spelled out in the regulations, are met.

RINs – unique code numbers assigned to each gallon of renewable fuel produced for use in the RFS program – are the currency of the RFS program. They are generated when renewable fuels are supplied to the market via domestic production or imports. Producers of renewable fuels intending to satisfy RFS requirements are subject to EPA regulations concerning approval of production pathways, facility and fuel registration, reporting, and validation.

The statute defines four categories of renewable fuels:

1. Total renewable fuel (RF) – All renewable fuels produced from approved feedstocks which achieve a minimum 20% reduction in lifecycle greenhouse gas (GHG) emissions, as determined by EPA’s model, when compared to the petroleum-derived fuels which they replace. The Set 2 rulemaking[1] EPA recently finalized explicitly removed renewable electricity as a qualifying renewable fuel.
2. Advanced biofuel (AB) – A subset of RF which achieves a minimum 50% reduction in lifecycle GHG emissions. Ethanol produced from corn starch is specifically excluded from this category. Sugarcane-based ethanol, co-processed renewable diesel (RD), and those sources of renewable natural gas (RNG) which do not qualify as a cellulosic biofuel fall into this category.
3. Biomass-based diesel (BBD) – A subset of AB which can be used to replace diesel fuel, jet fuel, or home heating oil. This category is comprised of biodiesel (BD), RD, and sustainable aviation fuel (SAF) production.
4. Cellulosic biofuel (CB) – A subset of AB which are produced from lignocellulosic feedstocks and which achieve a minimum 60% reduction in lifecycle GHG emissions. Cellulosic ethanol and RNG produced from feedstocks defined in the regulation – including biogas from landfills – qualifies in this category.

These four biofuel categories are “nested” under the RFS regulations (see Figure 1), creating five types of RINs. These are commonly referred to by their “D Code”:[2]

• D3 RINs – cellulosic biofuels
• D4 RINs – biomass-based diesel
• D5 RINs – advanced biofuels which are not cellulosic and not biomass-based diesel
• D6 RINs – renewable fuels which are not advanced biofuels (primarily corn ethanol)
• D7 RINs – cellulosic diesel

Figure 1 visually represents the relationships among the four renewable fuel categories and the five RIN types.

Figure 1. Schematic of RFS Categories

At the close of each compliance year, obligated parties are required to retire these different types of RINs to demonstrate compliance with each of their four annual renewable volume obligations (RVOs)[3] as follows:

1. Cellulosic Biofuels – Only D3 and D7 RINs can be utilized.
2. Biomass-Based Diesel – Primarily D4 RINs. D7 RINs not used to satisfy the cellulosic biofuels RVO can also be utilized.
3. Advanced Biofuels – D3, D4, D5, and D7 RINs can be utilized. The RINs used to satisfy the nested Cellulosic Biofuels and Biomass-Based Diesel RVOs are also included in meeting the Advanced Biofuels RVO.
4. Total Renewable Fuels – Any category of RIN can be utilized. This includes RINs that are used to satisfy the nested Advanced Biofuels RVO. D6 RINs are generally used to satisfy most of the portion of this obligation not satisfied by the obligated party’s compliance with the Advanced Biofuels obligation.

RINs Overview

One RIN represents an ethanol-equivalent gallon of biofuel produced for or imported into the U.S. market – one gallon of ethanol earns 1.0 D6 RIN while one gallon of BD earns 1.5 D4 RINs, and other fuels earn varying numbers of RINs per gallon based on their energy density and renewable content. For the most part, each RIN is valid for compliance only in the year that it is generated and in the following year. The appropriate number of RINs are assigned to each batch of renewable fuel at the time it is shipped from the production facility, and this assignment is recorded in EPA’s Moderated Transaction System (EMTS). The RINs are traded with the fuel until it is blended with petroleum-based fuel or sold to an end-user. At that time, the RIN is separated from the fuel and transferred to the party blending the fuel who may use the RIN to meet their RVO or sell the RIN to another obligated party. In the case of RNG, however, RIN separation occurs at the point where the RNG is injected into a common-carrier pipeline. Ownership of the RIN remains with the party owning the RNG at that point.

Producers and importers of the petroleum-based fuels that generate an RVO are the obligated parties under the RFS and, thus, are required to secure the RINs necessary each year to comply with these obligations. Refiners may secure their required RINs either attached to volumes of renewable fuels (such as ethanol and biodiesel) which they purchase or through direct purchases from parties offering RINs for sale. Refiners with RINs exceeding their obligations may sell them to other parties. Most RIN sales are by marketing companies who are not refiners and, consequently, have no RFS obligation. Third parties, upon registration with EPA, are permitted to hold and trade RINs without any requirements for participation in RFS-related business activities. The flows of fuel and RINs under the RFS are illustrated in Figure 2 below.

Figure 2. Fuel and RINs Lifecycle

Once separated, RINs are tradeable commodities with quoted market prices.[4] Obligated parties with an RVO need to acquire a sufficient number of each type of RIN each year to cover their obligation for each of the four RVO categories based on their annual volumes of gasoline and diesel fuel produced, imported, or blended. This may be done through RINs received from physical blending of renewable fuels or purchasing RINs from third parties. Obligated parties are required to utilize RINs generated during the compliance year or RINs carried over from the year prior to demonstrate compliance.[5] Obligated parties are permitted to carry over a deficit of up to 100% of each of their four annual obligations; they may not, however, carry over a deficit of the same obligation in two consecutive years.

Refiners who have integrated marketing businesses, such as Exxon, Chevron, BP, Marathon, and Phillips 66 acquire a large share of their required RINs through blending ethanol and biodiesel as part of their marketing business. Independent or “merchant” refiners who do not have integrated marketing businesses (such as PBF, CVR, and Monroe Energy) are effectively required to purchase all their RINs from other parties, including independent marketers, who do their own blending. Amongst U.S. refiners, there is a full spectrum ranging from firms with zero marketing to firms with marketing operations larger than their refining business (e.g., Shell and BP). Additionally, several refiners – such as Valero, Marathon, and Chevron – also have substantial investments in biofuel production. This range results in varying strategies for compliance with the RFS and different strategies for engaging in political advocacy concerning RFS obligations.

The RFS regulations are authorized by the Clean Air Act (CAA). Violation of any provisions of the RFS regulations exposes the violator to potential fines for each act of violation each day. Since many of the provisions of the regulations are on an annual basis, violations of these provisions would count as 365 violations for the purpose of assessing potential fines. Potential fines are significant, and include the maximum dollar amount per daily violation, a requirement to offset any environmental damage incurred due to the violation, plus a penalty covering any economic advantage (i.e., additional profit or cost savings) which the violator obtained through their non-compliance. EPA typically negotiates the actual fine based on the seriousness of the offense, whether it is a repeated or intentional violation, whether the violator voluntarily reported their violation, and any voluntary actions the violator took to mitigate the impacts of their violation.

Statutory Authority & Program Management

Many features of the RFS are set by the EISA, limiting EPA’s ability to adjust or modify provisions defined in the statute; modifications to those key provisions require congressional and presidential action. While annual volume requirements were defined in the statute for every year through 2022, EPA was authorized to reduce these requirements if it determined that the statutory volumes could not be met with available renewable fuels volumes or if it determined that requiring those volumes would create severe economic or environmental harm to an individual state, region, or the U.S. as a whole. As the development of CB production and imports has significantly lagged the timetable envisioned in the statute, EPA annually issued rules reducing the required CB volumes.

For years after 2022, the Clean Air Act (CAA)[6] directs EPA to determine the applicable volume targets for each of the four renewable fuel categories, in coordination with the Secretary of Energy and the Secretary of Agriculture, based on a review of RFS program implementation to date and an analysis of specified statutory factors. EPA refers to this as its “set” authority (as opposed to waiver authority), and has now used it to set volumes through 2027 in two sequential rulemakings: Set 1 in 2023 and Set 2 in 2026. In setting post-2022 volumes, the statute requires that BBD volume be no less than one billion gallons and that the advanced biofuel volume maintain at least its proportional share of the total required in 2022.

The CAA[7] also requires that EPA set the cellulosic biofuel standard based on its best projection of what industry can realistically produce in a given year — not an aspirational target. Critically, EPA’s projection must, as the D.C. Circuit has held, “take neutral aim at accuracy” and cannot deliberately skew toward overestimation. This constraint matters because when EPA determines that the projected volume of cellulosic biofuel production falls short of the applicable volume, it must reduce the required volume to the projected level and must offer obligated parties the opportunity to purchase cellulosic waiver credits (CWCs) to cover the gap. CWCs cannot be traded or banked; they must be used to meet the cellulosic standard in the year they are offered. A waiver may also have ripple effects: EPA may also reduce advanced biofuel and total renewable fuel volume requirements by up to the same amount as the cellulosic reduction. Conversely, when EPA sets a standard it believes industry can meet (as it has done for 2026 and 2027 under Set 2) no waiver is anticipated, and CWCs are not made available, reducing compliance flexibility for obligated parties who might otherwise rely on them. When EPA makes CWCs available, they are priced at a formula established in the statute.[8]

EPA converts the applicable volumes into annual renewable fuel percentage standards for each of the four categories, which are what obligated parties must use to calculate their compliance obligations. These percentage standards are derived by dividing the annual volume requirement for each category by estimated total U.S. petroleum gasoline and diesel consumption for the applicable year. Each obligated party (refiners and importers of petroleum-derived gasoline and diesel) then multiplies its own annual production or import volume by each of the four percentage standards to arrive at its four individual renewable volume obligations (RVOs) for the calendar year.

Historical Volumes & Pricing

The historical annual volume requirements for the RFS are presented in Table 1 (for the past 10 years) and Figure 3 (back to 2010) below. Contrary to popular belief, the RFS does not have a specific ethanol mandate. The implied mandate for conventional biofuels is the difference between the total renewable fuel obligation and the advanced biofuel obligation, and corn-based ethanol is typically the most cost-effective option for refiners to satisfy this portion of their obligations. This difference can be met with D6 ethanol RINs but, due to the RIN nesting provisions, it can also be met with any other RIN; in fact, D4 RINs have commonly been used to satisfy a portion of this implied mandate.

Table 1. Recent Annual RFS Volume Requirements (billion RINs)

Table 1 Notes:
– One RIN is equivalent to one ethanol-equivalent gallon of renewable fuel.
– Volumes for 2023-2025 are based on the Set 1 final rule (88 Fed. Reg. 44468, published July 12, 2023). Volumes for 2026 and 2027 are based on the Set 2 final rule (91 Fed. Reg. 16388, published April 1, 2026).

^a The 2024 cellulosic biofuel volume requirement was originally established as 1.09 billion RINs under Set 1. EPA subsequently reduced this volume requirement to 1.01 billion RINs in a separate action.
^b The 2025 cellulosic biofuel volume requirement was originally established as 1.38 billion RINs under Set 1. EPA reduced this volume requirement to 1.21 billion RINs in Set 2.
^c The 2023 total renewable fuel volume requirement includes a 0.25 billion RIN supplemental standard.
^d The 2026 and 2027 volumes include small refinery exemption (SRE) reallocation volumes.

Figure 3. EPA Renewable Fuel Standards (2010-2027)

Historic RINs Pricing Trends

Historic RIN prices from 2012 through March 2026 are presented in Figure 4 below. All four of the RIN types have shown significant volatility over the years due to both fundamentals (supply and demand, and volatility in the prices of petroleum products and agricultural commodities) and political uncertainty (EPA under different presidential administrations has taken different approaches to managing the program).

Figure 4. Historic RINs Pricing (2012-March 2026)Data source: OPIS
Note: The D4 and D6 trendlines continue beyond 2023 but aren’t visible because they are overlapped by the D5 trendline.