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FARM BUREAU: WHAT IS A SMALL REFINERY EXEMPTION?
Aug. 28, 2026
By Faith Parum, Ph.D., Economist, American Farm Bureau Federation
Key Takeaways
A small refinery exemption lets certain small oil refineries temporarily avoid part or all of the federal requirement to use renewable fuels, such as ethanol and biodiesel.
When exempted obligations are not reassigned to other refiners, the overall renewable fuel requirement effectively shrinks, reducing demand for RINs and weakening the incentive to blend renewable fuels.
For farmers, unreallocated exemptions mean weaker demand for agricultural products, particularly corn used for ethanol and soybean oil used for biomass-based diesel.
The Renewable Fuel Standard (RFS) requires minimum volumes of renewable fuels to be used in the U.S. transportation fuel supply. The program is important to agriculture because one of its objectives is to support rural economies by expanding demand for crops used to produce biofuels. Corn is the primary feedstock for conventional ethanol, while oils from crops such as soybeans, and other fats, are important feedstocks for biomass-based diesel.
But not every refinery is required to fully comply with the RFS. Qualifying small refineries can petition the Environmental Protection Agency (EPA) for temporary relief through a small refinery exemption, or SRE, if they demonstrate that RFS compliance would cause "disproportionate economic hardship."
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