BAKU, Azerbaijan, June 12. Net imports of biodiesel and renewable diesel into the United States are forecast to fall significantly in 2025 due to a major change in federal tax policy, according to the latest Short-Term Energy Outlook (STEO) from the U.S. Energy Information Administration (EIA), Trend reports.
Until the end of 2024, both domestically produced and imported renewable diesel and biodiesel benefited from a $1-per-gallon blender’s tax credit (BTC). However, starting in 2025, the BTC is set to be replaced by the Section 45Z Clean Fuel Production Credit — a measure that applies only to fuel produced within the U.S.
This policy change puts imports at a distinct economic disadvantage. As a result, the EIA projects a marked reduction in biodiesel and renewable diesel imports beginning in early 2025, reversing the elevated import levels seen in 2023 and early 2024.
“We expect the tax credit shift to have a significant impact on net imports, especially for biodiesel,” the agency noted in its report. “Because imported fuels will no longer qualify for the incentive, import volumes are expected to decline sharply.”
The report also highlights a new structural change in how the EIA measures renewable diesel trade. Prior to 2025, net import figures only accounted for imports, excluding any exports. With the inclusion of export data starting January 2025, the net import figure is more comprehensive, and the apparent decline more pronounced.
According to the EIA, about half of the projected drop in renewable diesel net imports is due to the updated methodology, while the other half stems from the loss of tax credit eligibility for imports.
Although the fall in imports will be partly offset by reduced exports due to tightening domestic supply, the overall impact is expected to lead to a noticeable contraction in U.S. reliance on foreign-sourced renewable diesel and biodiesel in the coming year.
