New biodiesel mandate expected to be a boon for U.S. soy farmers

SASKATOON — Biodiesel and renewable diesel producers in the United States are feverishly ramping up production, says a senior industry official.

Kurt Kovarik, vice-president of regulatory affairs with Clean Fuels Alliance America, said his member companies are gearing up to meet the U.S. Environmental Protection Agency’s (EPA’s) new Renewable Volume Obligations (RVOs) for 2026 and 2027.

In March, the EPA set the blending mandate for biodiesel and renewable diesel to 5.4 billion gallons in 2026 and 5.5 billion gallons in 2027.

That is a staggering increase from the 2025 level of 3.35 billion gallons.

Kovarik said plants had been operating at 50 to 60 per cent of their capacity in 2025 due to the low RVO and uncertainty surrounding tax policy.

“Flipping those plants back on doesn’t happen overnight,” he said during a webinar hosted by Agri-Pulse.

Those plants essentially have nine months to meet 12 months of the new RVO.

The EPA believes the plants will need to be operating at 90 per cent capacity to accomplish that feat.

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“I’m confident we’ll be able to do that,” said Kovarik.

In fact, he thinks the industry will be able to produce and sell six billion litres of biomass-based diesel in 2026.

The new RVOs are expected to be a huge boon for the nation’s 500,000 soybean farmers and the crushers that process their crops.

Greg Anderson, a Nebraska corn and soybean farmer, remembers when soybean prices were US$4 per bushel and soybean oil sold for $0.10 per pound before the biofuel industry took off in the U.S.

These days demand from the biodiesel and renewable diesel sector accounts for 10 per cent of the value of the soybeans he grows.

That contributed $300 million to his state alone this past marketing year.

When he was chair of the United Soybean Board in 2005 the biofuel industry consumed 1.5 billion pounds of soybeans per year. This April it took 1.05 billion pounds.

Crushers are on pace to process 2.7 billion bushels of the 4.3 billion bu. of U.S. soybeans produced last year.

Chris Schaffer, chief executive officer of Ag Processing Inc. (AGP), hasn’t seen anything more transformational for the soybean industry since he started working in the sector in 1994.

AGP’s 150 local co-operatives operate 11 soybean crush plants, five oil refining facilities and three biodiesel plants in the U.S.

The company is pleased with the EPA’s RVOs and with the strides made with the 45Z Clean Fuel Production Credit.

“With greater clarity now around volume obligations and tax credit guidance, the industry can begin operating with a stronger sense of stability and long-term certainty,” said Schaffer.

The company has invested over $1 billion in the past three years, expanding crush capacity at its plant in Iowa, building a new plant in Nebraska and adding a second bulk export terminal at the Port of Grays Harbor in Washington.

The export terminal will ship soybean meal and distiller’s grains to overseas markets.

“Expanding export opportunities for soybean meal will be critical to keeping the industry operating efficiently and near capacity,” he said.

The U.S. is producing an additional 10 million tonnes of soybean meal than it was a few years ago.

Schaffer said there has been a surprising increase in domestic consumption of the product.

“We’re sticking more meal into every chicken and pig in the United States than we’ve ever done before,” he said.

But there is still a need for increased exports.

Kovarik was asked if the U.S. will be able to meet the RVOs exclusively with domestically produced feedstocks. He said it’s too early in the new regime to answer that question.

But he noted that the EPA’s robust RVOs are taking the power out of California’s hands when it comes to determining what type of fuels are being produced and what feedstocks can be used.

California’s low carbon fuel standard had a lot of influence when the mandated volumes were much smaller.

But with the new robust RVOs, there will be plenty of fuel for all users. He said there is optimism surrounding sustainable aviation fuel, but it is on par with the optimism surrounding marine, rail, home heating oil and off-road heavy-duty fuel as well.

All three panellists said policy certainty is the most important factor for the biomass-based diesel sector going forward.

Kovarik said it’s time to start working on the RVOs for 2028 and beyond. He said it is hard to imagine that the EPA would backtrack from 2027 levels.

The biofuel and soybean sectors have set an audacious goal of having 15 billion gallons of biomass-based diesel production by 2050.

“I certainly think that’s achievable,” he said.

Anderson was in the room where that goal was set, and it raised some eyebrows. But he noted that one of the near-term goals was to have six billion gallons by 2030 and it now appears that will happen well ahead of schedule.