US biodiesel, renewable diesel net imports to drop in 2025 due to tax credit change, EIA forecasts

By Stephanie Kelly

NEW YORK, June 10 (Reuters) - The U.S. will significantly reduce the amount of biodiesel and renewable diesel it imports this year because of a federal tax credit change, the Energy Information Administration forecasted on Tuesday.

The tax credit change, known as Section 45Z and established under former President Joe Biden's signature Inflation Reduction Act, replaced a flat $1 per gallon blender's credit and instead rewards producers based on the carbon intensity of their fuels.

Section 45Z applies only to domestic production, unlike the $1 per gallon blenders tax credit, which had applied to both imported and domestically produced biodiesel and renewable diesel, the EIA said.

"As a result, imports will be at an economic disadvantage with the new tax credit and will decrease," the EIA said in a monthly short-term energy outlook.

U.S. biodiesel net imports are expected to decrease to zero in 2025, versus 20,000 bpd in 2024. Renewable diesel net imports are expected to drop to -10,000 bpd in 2025, versus 30,000 in 2024.

The agency added that the decrease in renewable diesel net imports appeared larger because of a structural change in its data. Before 2025, the EIA's renewable diesel net imports data only included imports but the agency has since introduced 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 said.