Production of renewable diesel and biodiesel in the United States declined sharply in the first quarter of 2025, according to the Energy Information Administration (EIA). The drop is being blamed on uncertainty surrounding federal biofuel tax credits and poor profit margins, reports Biofuels International.
While the EIA expects production to improve later this year, it warned that biodiesel output will likely remain lower than in 2024.
Renewable diesel and biodiesel are alternative fuels made from biomass. They can replace petroleum-based fuels and help companies meet renewable fuel requirements under the Renewable Fuel Standard, a program overseen by the U.S. Environmental Protection Agency (EPA).
In January 2025, U.S. biodiesel production fell to 60,000 barrels per day—the lowest level for that month since 2015 and around 40% below the output seen in January 2024. Although production picked up slightly in February and March, the first quarter average was just 70,000 barrels per day, down over 30% from the same period last year.
Renewable diesel production averaged about 170,000 barrels per day during the first quarter, a 12% drop from the first quarter of 2024. The decline was less steep than biodiesel’s, partly because renewable diesel had expanded more quickly last year. A 20% increase in production capacity since early 2024 also helped offset the decrease.
Still, when compared to the final quarter of 2024—when capacity was similar—renewable diesel output in early 2025 was down nearly 25%.
“This drop highlights how fragile the market can be when policy signals are unclear,” an EIA spokesperson said. “Producers need stability to plan and operate effectively.”
The agency expects production to gradually rise as the year continues, but challenges remain for an industry navigating economic pressure and uncertain federal support.
