Fueling Growth Despite Policy Uncertainty

Fuel quality, reliability and performance drive adoption while robust production capacity and domestic feedstock supplies position the industry for a rapid increase in output.

The U.S. biomass-based diesel industry is at a critical juncture. Biodiesel, renewable diesel and sustainable aviation fuel (SAF) are proven, scalable solutions that cut emissions and strengthen energy security. Yet despite the growing domestic supply and production capacity, policy uncertainty continues to cast a shadow over the market.

Even amid this uncertainty, one truth is clear: The industry is ready to turn on, backed by technical confidence, proven performance and essential value for farmers.

Quality, Reliability: the Backbone of Adoption

Fuel quality drives confidence across all markets. The eighth annual BQ-9000® Biodiesel Quality Report confirmed that accredited producers consistently deliver fuel exceeding ASTM standards. This assurance enables original-equipment manufacturers (OEMs) and fleets to adopt higher blends with confidence. In 2025, John Deere announced the approval of B30 biodiesel use across its entire portfolio of Tier 4 engines. Engine models older than 2010 are approved to use biodiesel blends up to B100.

Partnerships with the National Oilheat Research Alliance have expanded that confidence into the heating sector. Underwriters Laboratories certifications now allow equipment to operate on blends up to B100, and heating-oil dealers in the Northeast and Mid-Atlantic are successfully marketing B40 and higher blends.

There’s also growth in the marine sector. The International Organization for Standardization’s specification ISO 8217:2024 now approves B100, enabling increased biodiesel adoption in global shipping. These technical advances highlight that regardless of policy delays, biomass-based diesel performs reliably and safely across sectors, proving its readiness to scale.

Essential to Farmers, the Agricultural Economy

Biomass-based diesel is not only a climate solution but also essential to farm security. As farmers face high input costs, the domestic market for biodiesel and renewable diesel is crucial. Production represents roughly 10 percent of the value of all U.S.-grown soybeans, consuming on average 1 billion pounds of soybean oil each month and adding $42.4 billion to the U.S. economy, according to GlobalData.

With the domestic supply of soybean oil increasing, growth in the biomass-based diesel market is more important than ever. Since 2023, the soybean-crush industry has invested more than $6 billion to expand processing capacity. Meanwhile, U.S. biodiesel, renewable diesel and SAF producers have more than 6 billion gallons of production capacity built and ready to operate. These investments ensure that, when policy clarity is provided, the industry can immediately scale production to meet demand—supporting farmers, rural economies and U.S. energy security.

Policy Uncertainty Remains a Challenge

Despite technical readiness, federal and state policy uncertainty limits market growth. Key programs, such as the 45Z clean fuel production credit, experienced untenable delays in rulemaking, leaving farmers, feedstock providers and producers unable to plan contracts or operations ahead of the start of the year. Similarly, the Renewable Fuel Standard was not finalized before the start of the compliance year. U.S. EPA proposed robust biomass-based diesel volumes for 2026 and 2027, the first proposals aligned with industry growth, but final rules were delayed.

Full reallocation of small-refinery exemptions (SREs) is also essential. Failure to reallocate 100 percent of recently granted exemptions could undercut 500 million to 1 billion gallons of production in 2026-’27 and reduce soybean prices by 10 cents to 40 cents per bushel. Farmers cannot afford to lose this value.

Yet there is reason for optimism. For the first time in a long time, U.S. policy positions biomass-based diesel for growth. The industry has both the technical readiness and production capacity to immediately respond to policy and market signals, benefiting farmers across the board and driving adoption across transportation, heating and industrial sectors.

The industry continues to demonstrate its readiness to scale. Cold-flow technologies, BQ-9000® accreditation and high-blend certifications ensure biodiesel performs reliably across sectors, giving fleets, OEMs and heating operators confidence. These technical achievements show that quality and reliability remain constant, enabling market adoption and maintaining investor and consumer trust, even amid regulatory uncertainty.

The combination of robust production capacity, advanced technical programs and strong domestic feedstock supply positions the industry to scale rapidly with policy certainty. Fuel quality, reliability and proven performance will continue to drive adoption, protect farm income and support decarbonization, demonstrating that the biomass-based diesel industry is ready to turn on and deliver.

Author: Scott Fenwick

Technical Director

Clean Fuels Alliance America

573-635-3893

sfenwick@cleanfuels.org