BAKU, Azerbaijan, June 6. U.S. production of renewable diesel and biodiesel declined significantly in the first quarter of 2025, driven by uncertainty over federal tax credits and unprofitable market conditions, according to the U.S. Energy Information Administration (EIA), Trend reports.
Biodiesel production in January fell to just 60,000 barrels per day - the lowest since 2015 and 40% below January 2024 levels. While output modestly recovered in February and March, first-quarter production still came in over 30% below the same period last year.
Renewable diesel fared slightly better, averaging 170,000 barrels per day in the first quarter - down 12% year-on-year. Compared with the previous quarter, however, output dropped nearly 25%, despite a nearly 20% rise in production capacity since early 2024.
The EIA attributed the declines to negative margins, with major producers including Diamond Green Diesel, Phillips 66, and Marathon reporting losses. Uncertainty around the transition from the $1-per-gallon blender’s tax credit to a carbon intensity-based credit under the Inflation Reduction Act also caused some producers to scale back or idle operations.
Despite the weak start, the EIA expects renewable diesel production to rise about 5% over the year, supported by growing capacity. Biodiesel output, however, is forecast to decline by 15% in 2025 due to early-year disruptions and possible plant closures.
