Trade flows for biofuel feedstocks brace for upset from 45Z updates

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The US is changing domestic renewable fuel blending obligations as part of its shift toward more protectionist policies. Updates to the 45Z tax credit law, which governs biofuel incentives, has boosted biofuel feedstock prices throughout 2025. And the latest update in July is set to upset global feedstock trade flows and affect energy prices. 

Biofuels like Sustainable Aviation Fuel, biodiesel and Renewable Diesel typically rely on feedstocks like tallow, used cooking oil, and soybean oil. The July updates mean that imported feedstocks from countries such as Brazil and China will be less competitive than feedstocks produced in Canada, Mexico, and the US. 

The kicker for the US renewable fuels market is that feedstock supply from those three countries might not fully cover the domestic blending obligation. So now, both feedstock and RIN prices have surged. 

On top of this, an Executive Order signed by President Trump imposes a 50% blanket tariff on Brazilian imports. This makes the Brazilian tallow export market even less competitive to US buyers. 

At the end of the day, domestic producers already using local feedstocks are the likeliest winners. On the flip side, biofuel producers relying on imports will have to find local feedstock sources to stay competitive. And ultimately, these shifts in the 45Z tax credit and trade dynamics could raise energy prices for US consumers.