Biomass-Based Diesel Feedstock Demand Projected to Climb 57% in 2026, 81% in 2027: Analysis
The U.S. Environmental Protection Agency’s (EPA) 2026-27 Renewable Volume Obligations (RVOs) under the Renewable Fuel Standard (RFS) will require an unprecedented expansion in biomass-based diesel feedstock use, with total demand projected to increase 57% in 2026 and 81% in 2027 compared to 2025, according to an analysis released Wednesday by economists Scott Irwin at the University of Illinois and Todd Hubbs at Oklahoma State University.
Under this scenario, domestic biomass-based diesel production is projected to increase to 6.10 billion gal in 2026 and 6.43 billion gal in 2027, with imports contributing another 600 million gal and 1.30 billion gal, respectively, the economists concluded.
Adding domestic production and imports, the total biomass-based diesel supply would climb from 4.25 billion gal in 2025 to 6.70 billion gal in 2026 and 7.74 billion gal in 2027, levels that would require renewable diesel plants to operate near full capacity while biodiesel facilities sustain production rates rarely achieved over extended periods.
Applying these production gains to total biomass-based diesel supply – domestic production plus imports — the authors estimate total combined feedstock consumption will rise from 34.2 billion lbs in 2025 to 53.8 billion lbs in 2026 and 62.0 billion lbs in 2027.
Meanwhile, domestic feedstock use for biomass-based diesel is projected to rise from 20.5 billion lbs in 2025 to 32.8 billion lbs in 2026 and 34.6 billion lbs in 2027, while imported feedstock use would increase from 13.7 billion lbs in 2025 to 21.0 billion lbs in 2026 and 27.4 billion lbs in 2027.
“Compared to 2025, domestic feedstock use is projected to increase 60% in 2026 and 69% in 2027. The same figures for imported feedstock are 3% in 2026 and 100% in 2027,” Irwin and Hubbs said.
The economists argue that imported feedstocks will remain a significant part of the biomass-based diesel supply chain despite the incentives in the Section 45Z Clean Fuel Production Tax Credit that favor sourcing North American feedstocks.
Soybean oil remains the largest domestic feedstock in the economists’ outlook. Using a midpoint assumption that soybean oil accounts for 37.5% of feedstocks consumed in domestic biomass-based diesel production, they project soybean oil demand increasing from 12.4 billion lbs in 2025 to 18.4 billion lbs in 2026 and 19.4 billion lbs in 2027.
“Use of this magnitude would absorb a sizable share of available domestic soybean oil supply and would have substantial implications for the soybean oil market and the broader fats and oils complex,” the authors said.
In addition, their analysis pointed out that imported feedstock demand remains elevated because imported renewable diesel and biodiesel volumes are assumed toincrease, and because much of the U.S. renewable diesel industry was built around access to imported low-carbon feedstocks.
Roughly three-quarters of domestic renewable diesel capacity is located along the U.S. Gulf Coast and California coast, where producers have historically relied on imported feedstocks such as used cooking oil and tallow, the economists observed.
However, the authors caution that their projections depend on several assumptions that remain uncertain. For example, domestic biomass-based diesel production would need to sustain utilization rates well above recent levels, while imports of renewable diesel and biodiesel would need to recover despite slowing significantly under the current 45Z framework.
The analysis also highlighted uncertainty surrounding how producers will respond to the tax credit’s restrictions on feedstocks sourced outside North America. A larger-than-expected shift toward domestic feedstocks could reduce imports and increase demand for soybean oil, distillers’ corn oil and animal fats, according to Irwin and Hubbs.
“Layer on the broader uncertainty surrounding trade policy and tariffs, and the trade dimension is a large swing factor in these feedstock projections,” the economists wrote.
Conversely, if low-carbon imported feedstocks remain economically attractive, particularly for fuels sold into California’s Low Carbon Fuel Standard (LCFS) market, imported feedstock volumes could remain higher than anticipated.
“These layers interact, so a shortfall in one pushes demand into the others,” they said.
“The bottom line is that the final RVOs ask the sector to draw feedstock at a scale beyond anything in the recent record, while leaving genuinely open how the market will actually deliver these volumes across fuel imports versus domestic production, domestic versus imported feedstock, and the feedstock mix itself,” the economists concluded.