Biofuel Growth Is Turning Feedstocks into Strategic Commodities
The expansion of renewable diesel, biodiesel and sustainable aviation fuel is changing the economics of vegetable oils, animal fats and waste-based feedstocks.
The U.S. Department of Agriculture expects the use of vegetable oils and fats for biofuel production to expand under current U.S. renewable fuel policies.
That demand increasingly connects energy markets with agricultural and waste-collection systems.
Soybean oil, canola oil and corn oil compete alongside lower-carbon feedstocks such as used cooking oil, tallow and other waste fats.
Many of these materials already have established uses in food, animal feed, chemicals and other industries.
As renewable fuel capacity grows, the question is therefore not simply how much fuel producers can manufacture, but how much eligible feedstock can be sourced at an economically sustainable price.
Several Fuel Producers Are Competing for the Same Materials
U.S. Energy Information Administration data show how large the physical feedstock market has become.
In May 2026, U.S. biofuel producers consumed approximately 1.43 billion pounds of soybean oil.
Tallow consumption reached about 796 million pounds, while yellow grease — a category that includes used cooking oil — reached approximately 605 million pounds.
Corn oil contributed another 457 million pounds.
These materials are being consumed by a production system that includes biodiesel, renewable diesel, renewable jet fuel and other renewable hydrocarbon fuels.
The result is greater competition between production pathways for the same tonne of feedstock.
A waste oil suitable for renewable diesel may also be attractive to a SAF producer, while soybean oil demand can increase as producers seek additional volumes when lower-carbon waste feedstocks become scarce or expensive.
Policy Is Increasing Pressure on the Feedstock Pool
Higher renewable fuel requirements are expected to intensify the competition.
In its analysis of the 2026 and 2027 Renewable Fuel Standard, the U.S. Environmental Protection Agency considered whether sufficient domestic feedstocks would be available to support higher biomass-based diesel volumes.
EPA expects a broad mix of domestic and imported feedstocks to be required rather than relying on soybean oil alone.
The agency projects that approximately 25 to 30 percent of the required biomass-based diesel volume could be supplied using foreign feedstocks.
EPA also estimates that as much as 20 percent of soybean oil currently used in non-biofuel markets could shift toward biofuel production in 2026 and 2027, depending on prices and market conditions.
Those projections illustrate the wider effect of renewable fuel policy.
Higher mandates can stimulate investment and fuel production, but they also increase the value of the raw materials required to satisfy those mandates.
For producers, access to feedstocks is therefore becoming a competitive advantage in its own right.
Long-term supply contracts, diversified feedstock portfolios, better waste collection and new production pathways that rely on different carbon sources could become increasingly important as renewable fuel markets expand.
The next constraint on biofuel growth may not be production capacity alone. It may be the ability to secure enough sustainable raw material without simply shifting scarcity from the fuel market into agriculture, food and other existing industries.
Sources
U.S. Department of Agriculture, Economic Research Service — Oil Crops Outlook: May 2026
U.S. Energy Information Administration — U.S. Feedstocks Consumed for Production of Biofuels
U.S. Environmental Protection Agency — Renewable Fuel Standard: Standards for 2026 and 2027