Summary

Biomass-based diesel production continued to recover in recent months after a steep early-year decline linked to uncertainty over biofuel tax credits. Renewable jet fuel, however, has surged to record levels as new facilities came online, reflecting a growing shift toward alternative aviation fuels.

Ethanol production started the year on a strong footing, supported by steady global demand. While exports dipped in April, year-to-date shipments remained ahead of last year’s pace, driven by policies in Canada, the EU, and parts of Latin America that encourage low-carbon fuels.

Feedstock use for biofuel production increased significantly, especially for soybean oil, which regained its position as the leading input. Other oils, such as corn and canola, also saw gains. Feedstock imports fell sharply in April, led by steep declines in canola and used cooking oil. Beef tallow imports rose, with Brazil leading the charge. Despite trade barriers, strong beef output and export activity have made Brazil a key supplier in the biofuel feedstock market.

Biomass-Based Diesel

Biomass-based renewable diesel production totaled 214 million gallons, up 15% from the previous month, according to data from the Environmental Protection Agency. Output continued to rebound during the month after falling to multi-year lows in February as uncertainty concerning biofuel tax credits challenged production. 

Biodiesel production rose nearly 5% in April to 100.5 million gallons. Production was up for a third consecutive month. However, year-to-date output was down 62% from a year ago. Total biomass-based diesel production has been heavily challenged since the expiration of biofuel tax credits at the end of December. 

Renewable jet fuel production surged 249% in April to a record 13.4 million gallons. Accumulated output for the calendar year is up 325% year-over-year. The drop-in alternative to petroleum-based jet fuel has seen substantial growth since the renewable diesel boom, primarily in 2024.

While biomass diesel production took a sizable hit in the first quarter of 2025, renewable jet fuel experienced sizable growth and more than doubled from the previous quarter as new production facilities came online. 

Ethanol

U.S. ethanol production totaled 1.373 billion gallons in March, up nearly 8% from the previous month and 1% lower than March 2024, according to data from the EIA. Ethanol production is off to a strong start for 2025 despite the lower February print. Year-to-date production reached 4.1 billion gallons, up 2% from last year. Strong international demand for U.S. exports has kept ethanol processors optimistic despite a rocky start to the primary driving season. 

Monthly data from the U.S. Census Bureau showed April exports declined by 12% from the previous month to 172.3 million gallons. Volumes were also down nearly 29% from April 2025. Canada accounted for nearly three-quarters of April’s denatured ethanol sales and was the top destination for U.S. ethanol exports for the 49th consecutive month. 

Exports to the European Union surged 62% to 34 million gallons due to increased shipments to the Netherlands. Exports to India rose 7% to 20 million gallons. South Korea’s imports rose 8% to an 11-month high of 12.7 million gallons. 

Year-to-date exports reached 705 million gallons, up 6.3% from a year ago. Shipments are also off to a record start for the first four months of the year. 

Carbon emissions policies in countries like Canada have boosted demand for U.S. ethanol. Green policies in the European Union have led to increased exports. Central and South America have also been major growth areas for the U.S. ethanol market. 

Feedstock Usage

Feedstocks used for biofuel production totaled 2.693 billion pounds in March, up 29% from the previous month, according to monthly EIA data. Canola oil usage rose 154% during the month to 234 million pounds. Corn oil usage totaled 385 million pounds, up 33% from February. 

UCO usage in biofuel production totaled 487 million pounds, up 9% from the previous month. Beef tallow usage rose 12% in March to 704 million pounds and was the fifth-largest volume on record. Beef tallow as a total percentage of feedstock usage fell to 26% due to a rebound usage of other feedstocks. 

Soybean oil used in biofuel production totaled 832 million pounds, up 44% month-to-month and the highest since December. Additionally, usage accounted for 31% of total feedstock demand, surpassing beef tallow after losing its spot as the top feedstock in January. Soybean oil usage continued to rebound for a second month. Soybean oil used in biodiesel production totaled 502 million pounds, up from 425 million pounds in February. Soybean oil used for renewable diesel production rose to 331 million pounds, compared to 151 million pounds the previous month. 

Increased imports of foreign feedstocks such as UCO and beef tallow have led to lower overall usage of soybean oil in biofuel production. Feedstocks dominate renewable fuel costs, accounting for the largest share of production expenses. That makes biofuel producers extra particular in feedstock sources to maximize margins as best they can. 

Biofuel Feedstock Imports

U.S. feedstock imports of canola oil, UCO, and beef tallow fell by 27% in April to 835 million pounds, according to the U.S. Census Bureau. Imports fell sharply following a short-lived rebound and sending shipments to their lowest since June 2023. 

Canola oil imports fell 98% from the previous month to 367 million pounds. UCO imports totaled 214 million pounds, down 58% from March. Tighter supplies and tariffs have significantly reduced UCO imports from China. Year-to-date shipments are running 36% lower than a year ago. Meanwhile, cumulative imports from Australia are up 991% from last year. It’s unclear if those imports are being routed from China through Australia to bypass higher tariffs. 

Lower canola oil and UCO imports were offset by higher beef tallow imports, which rose 52% to 254 million pounds. Brazil was the main driver of the increase during the month, accounting for more than 50% of total imports. 

Year-to-date tallow imports are up 17% from 2024 at 731 million pounds. Much of the growth has been attributed to increased shipments from Brazil, which have been resilient despite higher tariffs from the U.S. Strong beef production has led to record beef exports from Brazil, as well as beef tallow as biofuel producers take advantage of low-carbon feedstocks. 

Additional Comments

On June 13, the Environmental Protection Agency released its proposed renewable fuel mandates for 2026 and 2027. Biomass-based diesel production volumes are proposed at 5.61 billion gallons for 2026, up 67% from the 2025 mandate. Volumes for 2027 are proposed at 5.86 billion gallons, up another 4.5% annually. Ethanol blending is unchanged at 15 billion gallons. 

One significant change in the EPA’s proposal is the introduction of a RIN value discount for foreign biofuels and feedstocks. Under the new rule, imported supplies would earn only 50 percent of the RIN value granted to their domestic counterparts, placing foreign producers at a clear competitive disadvantage.

A virtual public hearing for the proposal is scheduled for July 8, 2025. The EPA said it expects to have the finalized RVOs by November.

Report #12

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