West Des Moines, Iowa: Biodiesel plants in Iowa produced 244 million gallons in 2025, a sharp fall of 31% from 353 million gallons in 2024, marking the lowest output in ten years. Only eight plants reported any production during the year, and several of them operated only at times and far below their full capacity, according a press release issued by the Company.
The drop came amid ongoing uncertainty over federal renewable fuel rules and tax policies. Low blending targets under the Renewable Fuel Standard (RFS) and the absence of clear tax incentives weighed heavily on the industry throughout 2025.
Monte Shaw, executive director of the Iowa Renewable Fuels Association (IRFA), said the year was especially difficult for biodiesel producers across the country, including those in Iowa. He said unclear tax rules combined with low RFS targets created severe pressure on plants, many of which are struggling to stay open while waiting for decisions from Washington. Shaw said producers are hoping for quick guidance on the 45Z clean fuel tax credit and stronger RFS blending levels for 2026.
Soybean oil dominated biodiesel production in Iowa during 2025, making up 92% of total output. Animal fats, used cooking oil and corn oil each contributed less than 5%. Iowa’s biodiesel industry has the ability to produce more than 400 million gallons a year if plants are running at full capacity. The IRFA gathered the production data through a confidential survey of companies in the sector.
The year 2025 was the last year of a three-year RFS blending rule that set relatively low targets during the Biden administration. Although the Trump administration has proposed higher blending levels for 2026 and 2027, the plan has yet to be finalized, leaving producers uncertain about future demand.
At the same time, the long-standing biodiesel blenders tax credit expired at the end of 2024 and was replaced by a new clean fuel production tax credit known as 45Z. Rules for the new credit were not finalized before 2025, and despite changes approved by Congress last year, guidance from the Internal Revenue Service is still pending.
With President Trump expected to visit Iowa soon, Shaw said the industry hopes the visit will help speed up action in Washington. He said faster decisions on RFS blending levels and the 45Z tax credit could allow biodiesel production to recover in 2026. Several Iowa plants are currently idle, and Shaw said they could resume operations within weeks if policy clarity is provided.
