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In May 2025, the mood was grim as ag and energy gurus gathered near the Chicago River to network and contemplate the future of U.S. biofuels.
Speaker after speaker said misguided federal policy had left many fuel producers in the soy-heavy biomass-based diesel market fighting to survive. Some had already gone under.Cut to this week at the same event a mile north of the Chicago Board of Trade, where the global benchmark price of soybeans is set, and the scene is significantly brighter.
“What we are hearing from our fuel producers is the signals are strong for them to produce,” Clean Fuels Alliance America Chief Executive Officer Donnell Rehagen told Agri-Pulse on Tuesday. “From a feedstock production standpoint, they’re seeing the same thing. Demand is growing and growing fast.”
The turnaround comes just a little over a month after the Trump administration issued overall record high biofuel-blending volume requirements, with a notable jump for advanced lower carbon fuels like biodiesel and renewable diesel.
The biggest challenge now isn’t saving the industry but getting previously idled or slowed biofuel plants back up and more fully running, said Rehagen, whose group represents producers of U.S. biomass-based diesel and sustainable aviation fuel.
The Environmental Protection Agency has suggested that domestic production will need to be 90% of capacity. "That’s a big number. It’s a doable number, but a big number,” Rehagen said at a three-day conference held by Fastmarkets, a top cross-commodity price reporting agency. “We have to get the supply chain back up and running.”
Other federal moves are also lifting the outlook for farm-based liquid fuels as well, like the new 45Z tax credit that rewards use of North American biofuel feedstocks. That’s alongside the established and expanding low-carbon fuel markets of California and beyond.
Green diesel gets cheaper
The more optimistic energy at the Chicago gathering isn’t just on stage. The buzz of talks along the sidelines for potential feedstock agreements and other deals is on full display.
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Conflict in the Middle East and disruption of global oil shipments have had a potentially transformative impact on renewable fuels. Biodiesel prices in Europe recently traded below petroleum diesel for the first time, according to price assessment and analytics firm Argus Media.
The price gap is helping bolster the case of biofuel advocates who say the global price spikes and shortages of traditional fuels are highlighting the need for greater use of renewable fuels.
The broader potential effects of the Iran war also are a source of concern.
“Crises drive policy, and policy drives action. I’m still nervous about where we come out of this and whether it has a negative impact,” said Michael McAdams, president of the Advanced Biofuels Association, which represents global ag and energy behemoths including ExxonMobil, Cargill, BP, Neste and Shell.
Large-scale petroleum oil refiner Phillips 66, also a member of the trade group, recently expressed optimism about its renewable diesel business.
Last year, renewable diesel margins were broadly negative across the industry. Moving ahead, the business could see year-over-year free cash flow gains, Brian Mandell, Phillips 66’s executive vice president of marketing and commercial, told analysts last week during a quarterly earnings presentation.
The current blended biofuel credit under the federal Renewable Fuel Standard, known as a RIN, “is more than twice what it was in 2025,” Mandell said, adding that business is running “very well right now.”
McAdams on Tuesday also noted that so many biodiesel plants were forced to permanently shut down last year amid zero profit margins that the industry now faces a shift in where future gallons will come from.
“It was an ugly, ugly, ugly year,” he said.
Lingering uncertainties
Despite the outlook for better days ahead, uncertainties remain, especially around the 45Z credit.
The tax incentive’s base value is determined by the carbon emissions of a fuel’s entire production supply chain, a major change from the flat $1-a-gallon Biodiesel Blenders' Tax Credit that was replaced by 45Z last year. Trade groups representing truck stops, convenience stores and fuel retailers are pushing Congress to reinstate the old incentive, arguing it’s needed to temper fuel prices.
As the U.S. Treasury prepares to release final 45Z rules, another top issue for biofuel policy watchers is the Energy Department’s update of its so‑called GREET model, which producers will use to calculate the lifecycle emissions, or carbon intensity, of their fuels.
GREET, which stands for Greenhouse gases, Regulated Emissions, and Energy use in Technologies, assesses the environmental impacts associated with fuels starting from the farm. Paul Winters, CFAA’s director of public affairs and federal communications, and Greg Staiti, compliance director at renewable diesel and SAF producer Montana Renewables, both said they are watching closely for the GREET update.
“Producers should understand the value of the credit for the current year,” Winters said Tuesday.
The Renewable Fuels Association, a top U.S. ethanol trade group, also has pressed the Trump administration to release a 45Z GREET model update as soon as possible.
'The biggest risk'
As far as broader concerns, Staiti cautioned the Fastmarkets’ crowd not to get too hung up on potential problems and instead enjoy the moment.
“The biggest risk right now is focusing too much on the risk,” he said. “We have gotten everything that we have been asking the EPA for … don’t be afraid of that opportunity. Let's embrace it and let’s fulfill the promise.”
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