US Renewable Diesel Outlook Climbs Higher

Federal forecasters raised their renewable diesel and ethanol outlooks as record blending mandates begin reshaping US biofuel production

14 May 2026

Federal forecasters just handed America's renewable diesel sector a meaningful vote of confidence. On May 12, the Energy Information Administration bumped up its 2026 renewable diesel production forecast in its Short-Term Energy Outlook, raising ethanol projections in the same sweep. Biodiesel and sustainable aviation fuel outlooks stayed flat, a split that shows exactly where US biofuel policy is hitting hardest.

The catalyst is the EPA's Renewable Fuel Standard "Set 2" rule, finalized March 27. At 25.82 billion renewable identification numbers, the 2026 blending obligations are the highest in program history. Hitting those targets means biodiesel and renewable diesel producers must collectively push output more than 60 percent above 2025 volumes. Renewable diesel operators, benefiting from drop-in compatibility with existing infrastructure, are already moving to capture that demand.

Ethanol is riding the same tailwind. Expanded summer access to E15 blends and the removal of an indirect land-use change penalty from 45Z tax credit scoring have improved the economics of corn-based fuels. The EIA's revised numbers reflect that shift clearly.

Other segments face stiffer headwinds. Federal clean fuel credits for SAF dropped from $1.75 per gallon in 2025 to $1.00 this year, widening the cost gap with conventional jet fuel just as new capacity comes online. Calumet confirmed on May 8 that its 150-million-gallon-per-year MaxSAF expansion at Montana Renewables finished on schedule, but sector-wide SAF economics remain tight. Biodiesel producers, meanwhile, are still waiting on final 45Z guidance ahead of a public hearing not set until May 28.

Then there's feedstock. Since January, only North American materials qualify for the 45Z credit, shutting off large-scale imports of Chinese used cooking oil. At the Fastmarkets Biofuels and Feedstocks Americas conference in Chicago on May 6, industry participants warned that domestic waste oil and fat supplies are unlikely to scale fast enough to meet mandate volumes across all fuel types at once. Supply at the feedstock level may end up being the real bottleneck.

Still, the EIA's upgrade sends a clear signal. Renewable diesel and ethanol are capturing the upside of policy certainty, and for a market long shaped by regulatory lag, that momentum is exactly what producers needed.