NACS: Biofuels could face market disruption without blenders tax credit

If the U.S. EPA sets aggressive renewable volume obligations (RVOs) under the Renewable Fuel Standard without a congressional extension of the 40A biodiesel blenders tax credit, diesel prices could be significantly impacted, said the National Association of Convenience Stores, truck-stop association NATSO and the fuel-marketing association SIGMA.

In a letter to EPA Administrator Lee Zeldin, the associations, which together represent more than 90 percent of fuel sold at retail, noted, “Our members have grave concerns that setting volumes for total advanced biofuel at levels that the market is unable to economically absorb will result in steep increases in [RIN] prices and, by extension, in the retail price of diesel. Unrealistic mandates, particularly when they are not paired with the relief that the [blenders tax credit] could help provide, would be destructive of the market and impose palpable inflationary pressures that will hit American consumers directly in their wallets every time they buy virtually any good in the nation.”

The letter noted that fuel retailers support policies that enhance energy independence and support abundant, stable energy sources and that biofuels represent a key component of ensuring a stable fuel supply.

Extending the $1-per-gallon biodiesel blenders tax credit would restore certainty in the biofuels market, which has entered a production crisis, threatening supplies, NACS stated.

The expiration of the blenders tax credit at the end of 2024, coupled with an incomplete and ineffective tax framework created under the new 45Z clean fuel production credit, has decimated biofuels supply chains, the associations noted.

Many biofuel production facilities, particularly biodiesel plants, have scaled back or are shutting down entirely.

EPA data shows that total renewable diesel and biodiesel volumes are down by 58.8 percent since the biodiesel tax credit expired at the end of 2024.

Total volumes have declined by 50.2 percent year over year.

More than 20 U.S. biofuel facilities—representing almost 15 percent of the biofuels market—will shutter or idle production in 2025, according to public data, reducing biodiesel and renewable diesel capacity by nearly 750 million gallons per year.

Iowa, the leader in biodiesel production, could shutter most of its 10 biodiesel production facilities this year, removing nearly 20 percent of U.S. biodiesel from the market, NACS stated.

“In absence of an extension of the [blenders credit], EPA should remain wary of these major disruptions as it develops the forthcoming renewable volume obligations,” the associations said, adding that they are eager to work with EPA to advance consumer-oriented fuel policies that support the administration’s agenda and the American consumer.