US biodiesel and renewable diesel imports fall sharply in 2025

Renewable diesel and biodiesel are biomass-based diesel fuels that can replace petroleum-based distillate and be used to comply with the Renewable Fuel Standard (RFS) blending requirements for refiners administered by the US Environmental Protection Agency.

In 1H25, US biodiesel imports averaged 2000 bpd, a sharp drop from 35 000 bpd in 1H24. Renewable diesel imports averaged 5000 bpd, down from 33 000 bpd in 1H24. These import levels were the lowest for the first half of any year since 2012, when US biodiesel consumption was less than half of 2024 levels and renewable diesel consumption was negligible.

One key reason for the sharp drop in biodiesel and renewable diesel imports in early 2025 is the loss in tax credits for imported biofuels. Before 2025, both imported and domestically produced biodiesel and renewable diesel received a US$1/gal. blender’s tax credit (BTC). The Inflation Reduction Act replaced the BTC with the Section 45Z Clean Fuel Production Credit in 2025, which only applies to domestic production. This tax credit change placed imports at a relative economic disadvantage.

A second reason biodiesel and renewable diesel imports dropped in 1H25 was low US consumption of these fuels because of uncertainty around blending requirements and negative profit margins for blending biofuels. Compared with 1H24, US consumption of renewable diesel was down about 30% in 1H25, and biodiesel consumption was down about 40%. This lower consumption reduced demand for both imported and domestically produced biofuels.

The combination of poor blending margins and the relative economic disadvantage for imported biofuels led domestic blenders to rely on domestically produced biofuels for the smaller amounts they were blending. As a result, international biofuel producers found fewer profitable opportunities to send product to the US. For example, Neste, the producer of all of the renewable diesel imported to the US, reported a lower share of exports going to the US in 1H25 than in 1H24.

Looking ahead, the EIA expects US consumption of biodiesel and renewable diesel to increase as the year progresses to meet existing RFS mandates, but imports of the fuels will likely remain low because of the change in tax policy.

Although the EIA do not explicitly forecast biodiesel and renewable diesel imports in the Short-Term Energy Outlook (STEO), they do forecast US net imports. They assume low imports for both products in the forecast period and forecast US biodiesel net imports in 2025 and 2026 to be their lowest since 2012.

Read the article online at: https://www.hydrocarbonengineering.com/refining/05092025/us-biodiesel-and-renewable-diesel-imports-fall-sharply-in-2025/