The upcoming year is set to be significant for biofuel manufacturing for many years, and a series of choices made in 2025 and early 2026 could determine the demand for refining equipment and the pressure relief valves needed to maintain safe operating conditions.
The loosening of zero-emissions vehicle mandates has ensured there will be a significant demand for sustainable fuels in the transportation sector going forward, and Oils & Fats International has reported that India has set an aggressive five per cent blending target for sustainable aviation fuels by 2030.
However, whilst the demand for biofuel is evidently in place, the priorities for policies surrounding biofuel still currently need to be agreed upon in many countries, most notably the United States of America.
The blending mandates that are set to come into force in 2026 are not expected to be finalised until early in the year, according to sources cited by Reuters.
The issue is as much philosophical as it is financial and practical; given limited resources, should policy decisions favour domestic producers of biomass used to produce biofuel, or should they instead prioritise refineries based in the country?
The two groups have remarkably mutually exclusive goals, but to understand why, it is important to understand what each group wants, as best illustrated by a policy impasse in the United States.
What Is Happening With Biofuel In the USA?
The central issue that has caused friction between parts of the biofuel supply chain concerns the Renewable Fuel Standard (RFS), a mandate that requires the use of biofuels in transportation fuel.
The flashpoint as such was a set of rules mandated in June 2025, which would increase the mandatory volume of biofuel and halve the value of biofuel produced from imported feedstock in terms of compliance and renewable identification numbers (RINs).
The aim of these initial proposals was stated to be energy security, and the broad focus on increasing the biofuel market has been largely warmly welcomed.
The problem, however, has been with the details, and both refiners and producers want very different results from the proposals.
What Do Biofuel Producers Want?
Biofuel producers, which include any business that grows or supplies feedstock for biofuels, such as farmers who grow crops intended for biofuel production, as well as those that harvest the raw materials for advanced biofuel production, are looking for higher volume requirements.
The more biofuel that is needed to be blended into domestic petrol and diesel supplies, the greater the volume of biomass that is required and, by extension, the larger guaranteed market for biofuel producers, especially if refiners are encouraged to focus on domestic supplies.
What Do Biofuel Refiners Want?
Biofuel refiners, by contrast, are primarily looking for a slower, more gradual increase in mandates, without the restrictions of access to imported feedstock.
Specifically, many biofuel refiners use waste fats and oils to produce biofuel, neither of which affects agricultural supply. However, with refiners having already exceeded the total level of domestic production of waste oil, they have needed to import supplies of waste vegetable oil and grease from other countries.
Why Has A Decision On Renewable Fuel Quotas Been Delayed?
This impasse is one of the major reasons why the final decision on biofuel mandates under the RFS has been delayed, with several sources cited by Reuters suggesting that a decision was unlikely to be finalised by the Environmental Protection Agency until early 2026.
This, alongside a government shutdown and the complex intermingling of several decisions pertaining to biofuel policy both domestically and as part of trade agreements with countries such as the UK, has pushed the decision back.
Why Is The Delay A Problem?
The delay is bad for almost everyone involved for several reasons:
- The mandates determine supply contracts, and they cannot be locked in without consensus.
- They act as a hedge to volatile commodities markets, which provides additional risk to commodities traders.
- The mandates will determine demand, which is used to justify any scaling up of operations or increased capacity.
A delay on any of these ends causes these vital decisions to be delayed or even stopped, which given the long timescales of any decision to increase or decrease production, leads to an assumption of risk of undersupply or overproduction.
Should Biofuel Prioritise Producers Or Refiners?
Ultimately, without producers, the biofuel sector does not exist, and domestic supplies of feedstock can help reduce concerns about energy security and lower the emissions caused by transportation.
At the same time, the feedstocks available domestically are not always the best suited or most efficient for refiners, and removing that alternative option may cause more problems than it fixes.
