The United States is projected to sharply decrease its imports of biodiesel and renewable diesel this year, a direct consequence of a significant shift in federal tax credits, according to a forecast released by the Energy Information Administration (EIA) on Tuesday, reports TrandingView.
The change stems from Section 45Z of the Inflation Reduction Act, a key piece of legislation from the former Biden administration. This new tax credit replaces the previous flat $1 per gallon blender’s credit with an incentive that rewards producers based on the carbon intensity of their fuels.
Crucially, Section 45Z applies exclusively to domestic production, a stark contrast to the earlier $1 per gallon blenders tax credit, which covered both imported and domestically produced biodiesel and renewable diesel.
“As a result, imports will face an economic disadvantage with the new tax credit and are expected to decline,” the EIA stated in its monthly short-term energy outlook.
The agency anticipates that U.S. biodiesel net imports will fall to zero in 2025, a significant drop from 20,000 barrels per day (bpd) in 2024. Similarly, renewable diesel net imports are forecasted to decrease to -10,000 bpd in 2025, down from 30,000 bpd in 2024.
The EIA clarified that the larger apparent decrease in renewable diesel net imports is partly due to a structural change in its data collection. Prior to 2025, the agency’s renewable diesel net imports data only tracked imports, but it has since begun including renewable diesel export data.
“In this forecast, we assume about half of the decline in renewable diesel net imports in 2025 is due to the introduction of exports, while the other half is due to the tax credit change,” the agency explained.
