Tax changes and policy uncertainties are seen by industry leaders as making life difficult for producers, especially small ones, particularly due to the switch from the sector’s previous blender credit base to the 45Z domestic producer credit which has applied since January 1, 2025.
Unlike under the blender credit, the 45Z regulation does not apply to imported fuels, including fuels made in the US with imported used cooking oil. While the policy change is designed to deliver positive domestic benefits, implementation guidance and enabling legislation have both been slow to emerge.
An immediate impact of this on the US market has been a significant year-on-year decline in biodiesel consumption, due to the impact of falling imports. Looking at the domestic market for biodiesel, renewable diesel and SAF, in fact, the US is set to consume about 4 billion gallons this year, a fall of about 1 billion gallons compared to 2024.
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