Four federal biofuels barriers impacting soy

January 15, 2026 | Bethany Baratta

Soybean prices could get a boost if looming biofuel obligations are solidified and passed, says Matt Herman, chief officer of demand and advocacy for the Iowa Soybean Association (ISA).

Priorities for the biofuels space

Here are the four top priorities as it relates to the biofuels space and generating support for Iowa’s soybean farmers:

1) Finalize Renewable volume obligations (RVOs)

In June 2025, the Environmental Protection Agency (EPA) proposed biodiesel growth in the federal Renewable Fuel Standard for 2026 and 2027. The agency proposed 5.61 billion gallons and 5.86 billion gallons for biomass-based diesel, a significant volume increase for biomass-based diesel and overall advanced biofuel volumes compared to recent years.

But the deadline is looming.

With multiple steps still ahead, such as OMB review, return to EPA and publication in the Federal Register, ISA is deeply concerned EPA may miss the January 31, 2026, statutory deadline for publishing the final rule. If the rule isn’t finalized by January 31, the compliance date shifts to June 1, creating regulatory uncertainty that hurts markets.

2) Solidify small refinery exemptions and RIN demand

“One of the reasons that the market is anemic right now is because it doesn't know whether it's going to demand 5.651 billion gallons next year or if it's going to demand that minus whatever is taken away from the SREs,” Herman says.

3) 45Z tax credit and methodology

The One Big Beautiful Bill Act amended the 45Z Clean Fuel Production Credit by removing indirect land use change penalties and limited credit eligibility only to those biofuel producers who were using domestic feedstocks. The U.S. Department of the Treasury has not yet added the 45Z tax guidance that corresponds to the One Big Beautiful Bill Act revisions signed into law. Herman says the soybean industry has been working collaboratively to encourage the USDA to consider the calculations in the 45Z calculator for climate smart ag.

“There are simple fixes within this calculator that can align the soybean methodology with the corn methodology. And the fixes will greatly increase the value of these climate smart ag practices like no-till and cover crops or reduced tillage in the soybean system,” he says. “We are hopeful that we'll continue to be able to work with the Department of Energy and the USDA to have those changes implemented in a future version of the calculator.”

4) Lock in SRE limits

Congress is considering limiting the number of refiners who can apply for small refinery exemptions. Herman says locking in the exemptions would provide additional guidance on how many gallons are to be waived each year. This would guide the number of gallons that the soybean industry would then ask to be reallocated to compensate for those lost gallons.

Written by Bethany Baratta

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