Garbage Duty, SREs, SAF — and the RVO Timing Trap

With UK gasoil markets closed for the bank holiday, today’s focus turns to the regulatory fractures shaping compliance behavior and global SAF trade.

SREs: Burdens That Breed Backlash

Think of the RFS like a household chore. Five kids are told to take out the garbage (the RVO). If two are excused (SREs), the trash doesn’t disappear — it’s reallocated to the remaining three.

But those three don’t quietly shoulder the load. They get pissed. They short RINs to bet on future leniency. They roll obligations forward, pushing risk into the next year. And, crucially, they fight back — in court, in Congress, and at EPA’s door — arguing that if exemptions are handed out, they deserve one too.

This is why SREs have been so corrosive: they don’t just shift compliance, they condition survivors into adversaries. The EPA’s recent commitment to reallocate waived gallons is designed to break that cycle and restore program integrity.

At the same time, the EPA has proposed a 50% haircut on imported gallons, effectively halving the RIN value for imports. If enacted, it would reinforce domestic compliance value and align the RFS with IRA incentives. However, this measure is only in the proposed RVO rule, and any material changes after August 8 would require a new proposal and public comment — likely pushing finalization into 2026.

SAF: Europe’s Dual-Track vs. America’s Incentives

Europe – Mandates + Two-Tiered Build-Out: ReFuelEU Aviation sets an unambiguous demand curve: 2% SAF in 2025, 6% by 2030, 70% by 2050. Faced with this, Europe is pursuing a dual-track strategy:

• Greenfield ambition:

  • Cepsa/Apical JV (Huelva, Spain): €1.2B, 500,000 t/y SAF + HVO, secured feedstock supply from Apical.

  • TotalEnergies Grandpuits (France): fossil-free platform, 285,000 t/y SAF by 2027.

  • Repsol Cartagena (Spain): 250,000 t/y advanced biofuels unit due 2026.

  • Shell Rotterdam (Netherlands): paused 820,000 t/y facility, but still a marker of Europe’s ambitions.

  • Eni Livorno (Italy): refinery conversion into a dedicated biorefinery.

• Co-processing pragmatism:

  • TotalEnergies Normandy (France): ~160,000 t/y SAF from co-processing.

  • Antwerp (Belgium) & Leuna (Germany): 50–80,000 t/y per site.

  • Eni Taranto (Italy): co-processing UCO since 2021.

  • Repsol Tarragona (Spain): biomass co-processing for SAF.

This two-tier system lets Europe bridge the early mandate years (2025–2030) with co-processing while building the heavy-capacity greenfields for the 2030s. But trade policy creates risk: Brussels exempted SAF from anti-dumping duties on Chinese HVO to ensure enough supply — a strategic loophole that may foster long-term Chinese dependency. EU also renewed countervailing duties against US produced FAME/HVO/SAF through 2026 despite fact that incentives in US have changed dramatically from a blending Tax credit to a producer carbon intensity credit. It should be noted that the UK after coming out of the EU has become a significant importer of HVO from the US at the expense of locally produced UCOME.

United States – Incentives but No Co-Processing Credit. The U.S. playbook is different. Section 45Z of the IRA delivers up to $1.75/gal for SAF starting January 2025 — but explicitly excludes co-processing. Co-processed gallons can still generate D5 RINs under the RFS, but that leaves them tied to volatile RIN values, not fixed credits.

In practice:

• Europe treats co-processing as a bridge to scale.

• U.S. sidelines it, forcing refiners toward greenfield builds if they want 45Z certainty.

RVO Timing: The Procedural Trap

EPA proposed the 2026–2027 RVOs on June 13, 2025. Hearing: July 8. Comment period: closed August 8, 2025. Deadlines: The 2026 RVO was due by October 31, 2024 (already missed). The 2027 RVO is due October 31, 2025.

Here’s the problem: under rulemaking procedure, if the EPA wants to make material changes post-comment, it must issue a new proposal and reopen public comment. That makes finalization in 2025 unlikely. The import haircut, the reallocation pledge, and even the core volumes all remain proposed, not law — reinforcing uncertainty into 2026.

Bottom Line

• SREs don’t just redistribute obligations — they create backlash, turning refiners into adversaries.

• SAF in Europe: a two-tier system — co-processing today, greenfields tomorrow.

• SAF in the U.S.: incentives only — greenfields get 45Z, co-processing is left to the volatility of RINs.

• RVOs remain procedural hostages — finalization this year looks unlikely, keeping compliance a moving target.