DES MOINES — Leaders of Iowa’s biodiesel industry are sounding the alarm after reports that the U.S. Environmental Protection Agency may double the number of Small Refinery Exemptions (SREs) that allow refineries to opt out of blending renewable fuels into gasoline. Industry officials say the change would drastically cut demand for biodiesel and could cost soybean farmers about $1 billion in lost revenue.
Industry says recovery at risk
Grant Kimberly, executive director of the Iowa Biodiesel Board, told Radio Iowa the biodiesel sector has only recently begun to recover after two difficult years that forced some Iowa plants to slow or halt production. Doubling SREs, he said, would risk undoing that recovery.
“We just have to make sure that the Trump administration realizes what a challenging time it’s really been for farmers and biofuel producers like biodiesel producers, and we’re barely just starting to see them get back on their feet here, and let’s not have something like this knock them right back off their feet,” Kimberly said.
Kimberly said industry estimates show the rumored exemptions would eliminate roughly 500 million gallons of biomass-based diesel demand nationwide. He added those lost gallons translate into the devastating financial impact for soybean growers.
Political and industry reaction
The reports follow a White House-era decision to increase mandated renewable fuel blending levels in 2026 and 2027, a policy move that had bolstered demand for biofuels. Agriculture groups and members of Iowa’s Congressional delegation have publicly opposed expanding SREs. The oil and gas industry has historically pushed for greater use of exemptions and opposed blending mandates.
Radio Iowa’s reporting noted several ag organizations and Iowa lawmakers have expressed concerns if the EPA moves to expand exemptions. Those objections reflect the stakes for rural economies that rely on soybean markets and local biodiesel production facilities.
What SREs do and why they matter
Small Refinery Exemptions are waivers that exempt qualifying refineries from federal requirements to blend a specified volume of renewable fuels into transportation fuel. Proponents of exemptions argue they shield small, financially distressed refineries from compliance costs. Opponents contend that excessive use of SREs reduces effective demand for biofuels, undermining renewable fuel markets and the farm economy.
- Estimated lost biodiesel demand: 500 million gallons
- Estimated impact on soybean farmers: about $1 billion in lost revenue
- Recent action that increased demand: higher renewable fuel blending mandates for 2026 and 2027
Local impact in Iowa
Iowa is a top producer of soybeans and home to multiple biodiesel plants whose operations and employment depend on predictable demand for biomass-based diesel. Industry leaders say abrupt expansion of exemptions could prompt reduced output, layoffs or idled plants — outcomes that would ripple through farm communities and supply chains.
Producers and plant operators often point to federal blending programs as a key market stabilizer because they create a baseline level of demand beyond export and food markets. When exemptions are granted in large numbers, that baseline can erode quickly.
| Item | Estimate |
|---|---|
| Lost biodiesel demand | 500 million gallons |
| Potential lost revenue for soybean farmers | $1 billion |
What comes next
At this stage the reports describe the move as a planned or rumored EPA action. Industry officials and some lawmakers have urged the administration and the agency to consider the economic consequences for farmers and biofuel producers before finalizing any changes.
For Iowa farmers and plant operators, the immediate priorities are monitoring agency announcements, coordinating with state and national ag groups, and urging lawmakers to press for alternatives that would preserve demand for renewable fuels while addressing any legitimate refinery hardships.
As the situation develops, industry stakeholders say they will continue to push for policy outcomes that sustain the gains made by the biodiesel sector since the federal blending increases took effect for 2026 and 2027.
Meredith Kowalski is the state correspondent for WE NEWS covering agriculture, energy and state policy in Iowa.
