U.S. Biofuel Imports Lag Behind Earlier Levels
U.S. imports of bio-based diesel have remained well below earlier levels in 2026, creating a new variable for a market facing historically high federal renewable fuel requirements.
Valero Energy executives said on July 30 that imported volumes were not increasing as quickly as some market participants had expected.
According to market data cited by Reuters, U.S. biodiesel imports through June 2026 were only about one-quarter of the volume imported during the same period in 2024.
The slowdown comes as refiners and fuel importers face substantially higher Renewable Fuel Standard obligations, increasing the importance of both domestic production and access to qualifying imported fuel.
The 45Z Credit Changes the Economics of Imported Fuel
A major structural change is the replacement of the former biodiesel blender tax incentive with the Section 45Z Clean Fuel Production Credit.
The previous framework allowed U.S. fuel blenders to receive a tax benefit on qualifying imported biodiesel.
Section 45Z instead provides an income tax credit for eligible clean transportation fuel produced domestically, shifting the incentive toward U.S.-based production.
For fuel produced after the end of 2025, additional feedstock rules also apply to the credit.
The result is a different competitive environment for imported biodiesel, which no longer receives the same federal tax treatment that helped support trade under the previous system.
Lower Imports Put More Pressure on Domestic Supply
The import slowdown arrives as the EPA has set record biomass-based diesel requirements for 2026.
The underlying 2026 requirement is 8.86 billion biomass-based diesel RINs, rising to 9.07 billion RINs after the reallocation of volumes associated with earlier small-refinery exemptions.
That creates a strong compliance demand signal at a time when imported supply is less available than in previous years.
Valero has also pointed to registration requirements for foreign producers and new tariffs as additional obstacles to increasing imported volumes.
However, not everyone in the market agrees that registration is the central constraint. Agricultural economist Scott Irwin has argued that sufficient registered import and domestic production capacity exists to meet the obligations.
For renewable fuel markets, the disagreement highlights a larger question: whether domestic producers can increase output quickly enough to meet higher mandates without relying on the level of imports seen in previous years.
If imported supply remains constrained, more of the compliance burden may shift toward U.S. biodiesel and renewable diesel plants, domestic feedstocks and the market for RIN credits.
Sources
Reuters — U.S. Refiner Valero Says Tax Credit Overhaul and Registration Hurdles Have Slowed Biofuel Imports, July 30, 2026
U.S. Environmental Protection Agency — Final Renewable Fuel Standards for 2026 and 2027
Internal Revenue Service — Clean Fuel Production Credit