U.S. imports of biodiesel and renewable diesel plunged in the first half of 2025, reaching their lowest levels in more than a decade, as changes to federal tax policy eliminated key incentives for foreign-produced biofuels. The sharp decline follows the implementation of the Section 45Z Clean Fuel Production Credit, which replaced the previous $1-per-gallon blender’s tax credit and restricted eligibility to domestically produced fuels.
According to new data released by the U.S. Energy Information Administration (EIA), biodiesel imports averaged just 2,000 barrels per day in the first six months of 2025, down from 35,000 barrels per day during the same period in 2024. Renewable diesel imports fell to 5,000 barrels per day from 33,000 barrels per day a year earlier. These figures represent the lowest first-half import volumes since 2012, when U.S. consumption of both fuels was significantly lower.
The dramatic reduction is directly linked to changes enacted under the Inflation Reduction Act, which took effect in January 2025. The legislation replaced the blender’s tax credit, which had supported both imported and domestic biofuels, with the Section 45Z Clean Fuel Production Credit that applies only to fuels made within the United States. This policy shift effectively removed the financial viability of importing biodiesel and renewable diesel, creating a competitive advantage for domestic producers.
At the same time, U.S. consumption of biofuels also declined significantly. The EIA reported that renewable diesel use fell by approximately 30 percent in the first half of 2025 compared to the same period in 2024, while biodiesel consumption dropped by roughly 40 percent. Market analysts attribute the fall in usage to uncertainty over blending requirements, weaker blending margins, and reduced demand in the commercial transport and industrial sectors.
Renewable diesel and biodiesel consumption decline sharply
Neste, a leading global renewable fuel producer and the primary exporter of renewable diesel to the United States, reported a marked decline in shipments to the U.S. market this year. With imported volumes no longer benefiting from federal subsidies, U.S. blenders have increasingly turned to domestic sources to meet their renewable fuel obligations under the federal Renewable Fuel Standard.
Government forecasts suggest this trend will continue. The U.S. Department of Agriculture projects that more than half of domestic soybean oil production in the 2025–2026 marketing year will be consumed by the biofuel sector, up significantly from prior years. At the same time, U.S. soybean oil exports are expected to decline from 2.6 billion pounds to 700 million pounds, reflecting the growing emphasis on domestic biofuel production and processing.
Policy developments have further tightened the landscape for imports. In August 2025, the Environmental Protection Agency (EPA) proposed limiting the generation of Renewable Identification Numbers, or RINs, from biodiesel made using foreign feedstocks. The proposed rule would cut RIN credit generation for such imports by 50 percent, a move aimed at strengthening domestic supply chains but criticized by some industry groups for potentially increasing fuel costs and disrupting supply flexibility.
Biofuel import slump likely to continue through 2026
Trade associations, including the American Petroleum Institute, have raised legal and economic concerns over the revised incentives and regulatory changes. They argue the policies could stifle market competition, limit supply diversity, and burden consumers with higher prices, especially in regions heavily reliant on imported fuels.
With the United States prioritizing domestic production over foreign supply in its clean energy strategy, the biofuel import market is likely to remain subdued through 2026. Analysts caution that future policy clarity and stable blending economics will be critical to maintaining investment in renewable fuels and ensuring balanced supply across the national energy mix. – By Content Syndication Services.