Bipartisan Bill Would Fix RFS Woody Biomass Definition to Create Market for Forest Thinning

The Wildfire Reduction Market Expansion Act of 2026

A bipartisan group of lawmakers is pushing a narrow change to the Renewable Fuel Standard that they say would create a market for low-value wood now piling up in America's forests and sawmills. The Wildfire Reduction Market Expansion Act of 2026, sponsored by Sens. Jeff Merkley (D-Ore.) and Cindy Hyde-Smith (R-Miss.) along with Reps. Cliff Bentz (R-Ore.) and Bennie Thompson (D-Miss.), would revise the RFS definition of woody biomass so that material from forest thinning, hazardous fuels reduction, timber harvest residuals and sawmill byproducts can qualify as feedstock for advanced biofuels, including sustainable aviation fuel.

The proposal responds to two compounding pressures. Since 2014, 37 U.S. pulp and paper mills have closed, stranding more than 50 million tons of pulpwood, chips and other residual material — the equivalent of nearly 11,000 truckloads of wood per day — and costing the forestry sector more than $800 million annually, according to figures cited by bill supporters. Nearly a quarter of remaining mills are at significant risk of closure. At the same time, wildfire risk has escalated: more than five million acres have burned this year, well above the ten-year average, and suppression costs have ballooned to nearly $3 billion annually, the article states.

The central argument from Dave Tenny, president and CEO of the National Alliance of Forest Owners, is that the RFS's current definition of woody biomass is 'unworkable' and prevents most low-value wood from qualifying as eligible feedstock. As a result, no transportation fuel from woody biomass has been produced under the program. The fix would not change how the RFS operates, including the allocation of Renewable Identification Numbers (RINs), but would correct what supporters call an 'arbitrary definitional bias' against wood, allowing stranded wood to become revenue-generating feedstock for advanced biofuels.

How the RFS Definitional Fix Could Reshape Forestry and Biofuel Incentives

The Economics of Stranded Wood

The financial logic is straightforward: sawmill residuals like sawdust can represent about 20 percent of a log's value, often the difference between profit and loss. When local pulp and paper mills close, that residual market disappears, turning a revenue source into a disposal cost. The same dynamic hits forest management: without a market for thinned material, landowners face higher costs for hazardous fuels reduction and may reduce investment or convert forests to other uses. The bill's supporters argue that creating a biofuel market for this wood would restore that missing revenue stream and give rural communities an economic reason to support forest thinning.

Why the RFS Definition Matters

Under the current RFS, woody biomass is recognized as renewable in other federal policies, but the specific definition within the RFS excludes most low-value wood. The proposed change would make thinning residues, sawmill residuals and other lower-value material eligible as advanced biofuel feedstock — a category that does not compete with corn ethanol or other conventional fuels. Because woody biomass is best suited for advanced biofuels such as sustainable aviation fuel, the change is designed to unlock a new market without disrupting existing biofuel producers. Notably, no woody biomass transportation fuel has ever been produced under the RFS, so the change is essentially creating a market from scratch.

What the Bill Would and Would Not Do

The bill is a targeted legislative fix, not a comprehensive solution. Tenny concedes that no single piece of legislation will reopen closed mills or stop catastrophic wildfires. Instead, the measure aims to change incentives over time: by making woody biomass a viable feedstock, it could support new biofuel facilities, stabilize sawmill economics, and encourage forest thinning that reduces fuel loads. The bipartisan lineup — two Democrats and two Republicans from timber- and forestry-heavy states — signals that the idea has political legs, but passage is not guaranteed. The bill's supporters are framing it as a market-based complement to wildfire spending, not a replacement.

Next Moves for Timber, Sawmill and Biofuel Stakeholders

The bill's practical impact depends on how and when the RFS definition changes. Here is what specific actors should watch or do based on the proposal's details:

• Sawmill operators: Calculate whether your sawdust and chips would qualify under the revised woody biomass definition, and estimate the revenue recovery from that roughly 20% of log value currently at risk when residual markets vanish.
• Timberland owners: Quantify the net cost of thinning today — removal cost minus any chip or pulpwood revenue — versus projected revenue if thinning residues become eligible RFS feedstock, since the bill explicitly covers material from forest thinning and hazardous fuels reduction.
• Biofuel and sustainable aviation fuel producers: Review the bill's language to determine whether it creates a new certified feedstock stream for woody biomass that would not compete with corn ethanol under the RFS, and assess how it could affect your RIN generation opportunities.
• Policymakers and industry associations: The bipartisan sponsorship suggests the bill could move, but expect it to be attached to broader energy, farm or appropriations legislation rather than passed as a standalone measure; the next milestone is committee markup.