US biofuel credits plunge as diesel rally and Iran tensions return

The U.S. Energy Information Administration said U.S. biodiesel imports averaged 2,000 barrels a day in first-half 2025, the lowest first-half level since 2012.

The same EIA series put renewable diesel imports at 5,000 barrels a day in 1H 2025, down from 33,000 b/d a year earlier, after the market shifted from the biodiesel blenders’ tax credit to the new 45Z clean fuel production credit. The import slump left both fuel streams at levels not seen in more than a decade and reinforced how quickly tax policy can reset trade flows.

The policy backdrop stayed unsettled through June. The U.S. Environmental Protection Agency on June 13 proposed changes to renewable fuel standards that would allow credits generated through imported feedstocks, while Reuters reported on June 16 that a Senate bill would shrink the tax credit for biofuels made from foreign feedstocks. Reuters also reported that the House tax and spending bill passed in May would extend 45Z through 2031 but bar most foreign feedstocks from qualifying. That mix of proposals has favored domestic feedstocks in the near term, even as it leaves the compliance value of imported material unresolved.

Argus described the policy shift as elevating domestic feedstocks, while Fastmarkets said the U.S. feedstock and biodiesel industries faced significant uncertainty over tariffs, the BTC-to-45Z transition and other policy changes. ResourceWise said first-half 2025 U.S. imports of biodiesel and renewable diesel plunged to their lowest levels in more than a decade, underscoring how tightly the trade flow has been tied to the tax code rather than to outright fuel prices.

That is the contrast now facing the market: diesel and jet fuel strength tied to geopolitical risk, while biofuel credits react to compliance rules and feedstock eligibility. The Bipartisan Policy Center said diesel prices were up 58% year over year and jet fuel 106% in the context of Iran-related disruption, a move that has widened the gap between physical fuel prices and the policy-driven credit market. As Middle East tensions return, traders are still pricing 45Z, foreign-feedstock limits and RFS compliance expectations, not just the direction of diesel itself.