Max Production

Ron Kotrba
1 hour ago
2 min read

What a difference a few months—and policy clarity—can make for this industry.

When I put together the winter issue of Biobased Diesel® late last year, the U.S. biobased diesel market was struggling.

Biodiesel producers seemed to endure the worst of the hardship after the blenders tax credit expired Dec. 31, 2024.

Meanwhile, its replacement—section 45Z—has been in an endless holding pattern, unconscionably low 2023-’25 renewable volume obligations (RVOs) under the Renewable Fuel Standard curtailed production and stifled growth, RVOs for 2026-’27 were neither known nor finalized, and how U.S. EPA would deal with waived gallons from small-refinery exemptions (SREs) was anyone’s guess.

To put it bluntly in a G-rated sort of way, the market was an excrement show.

Then, in early February, the U.S. Department of the Treasury and Internal Revenue Service issued long-awaited proposed rules for the section 45Z clean fuel production credit—nearly four years after it became law in the Inflation Reduction Act of 2022.

In late March, EPA finalized RVOs for 2026-’27 with record-high volumes for biobased diesel representing the biggest jump in RFS program history.

The agency also decided to reallocate 70 percent of the waived SRE gallons from 2023-’25.

Furthermore, it postponed the renewable identification number (RIN) credit reduction, also known as the “half-RIN” proposal, for imported biofuels and biofuels made from foreign feedstock, until 2028.

EPA also lowered the equivalence value (EV) for renewable diesel from 1.7 to 1.5—putting it on equal footing with biodiesel—while specifying SAF EV values at 1.5 and the biobased naphtha EV at 1.4.

When EPA announced the RVOs in late March, it said U.S. biodiesel and renewable diesel production and use will need to increase by over 60 percent to meet the historic volumes.

A month after the final volumes were released, Donnell Rehagen, CEO of Clean Fuels Alliance America, said the new RVOs marked a turning point for the clean-fuels industry.

“For the first time, we are hearing widespread discussion of max production across the industry,” he said.

One of those plants currently running at full capacity is Western Iowa Energy in Wall Lake, Iowa. “Now we can confidently plan and budget,” said WIE President Brad Wilson.

After covering these fuels and markets for more than 20 years, I have learned a few things along the way.

This industry is resilient.

The people behind it are strong.

Its roots run deep and its branches rise high and wide.

While it is drought-tolerant, water and nourishment are needed to thrive.

We just got our fertilizer and rain.

Let’s do this.