What’s on my radar for 2025 (continued):
2025: Year of the Snake Policies & Mandates
2025 is the Year of the Snake in the Chinese zodiac, promising wisdom, adaptability, and transformation.
In the world of commodities and particularly biofuels, however, this year feels less about serpentine wisdom and more about navigating a constricting regulatory landscape.
Like a snake shedding its skin, old policies have been discarded, replaced by new policies and mandates that coil tightly around the industry, leaving some market participants paralyzed for the time being.
These changes, though largely known (and some unknown, like 45Z), remain unpredictable and risky, unleashing a wave of unintended consequences on an already volatile market.
Ultimately, 2025 will be remembered as the Year of Policies and Mandates, where governments around the globe tighten their grip on agriculture, for better or worse.
U.S. Biofuels: What we know
Imports likely come to a screeching halt as imported biomass-based diesels no longer qualify for 40A’s $1/gallon tax credit.
Through October, the U.S. imported a record 763 million gallons of biomass-based diesels:
Imports accounted for 18% of total U.S. supplies in 2024 (through September) - nearly one in five gallons.
Two things to consider:
Less supplies (including imports) = higher prices, higher RIN values, or both
It takes >7.5 pounds of feedstock (fats/oils/greases) to produce one gallon of biomass-based diesel. Less imports = more reliance on domestic production & feedstocks, by default
At the same time, the D4/D5 mandate increases by 350 million gallons in 2025, requiring larger quantities of biomass-based diesels to be blended into U.S. fuel supplies.
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