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

Energy Information Administration predicted on Tuesday that the U.S. would significantly reduce its imports of biodiesel this year due to a change in federal tax credits.

The Section 45Z tax credit, established by former President Joe Biden under his signature Inflation Reduction Act (IRRA), replaced the $1 blender's credit with a credit based on carbon intensity.

The EIA stated that Section 45Z only applies to domestic production. This is in contrast to the blenders' tax credit of $1 per gallon, which applied to both domestic and imported biodiesel or renewable diesel.

In a short-term monthly energy outlook, the EIA stated that "as a consequence, imports will suffer an economic disadvantage due to the new tax credit" and decrease.

In 2025, the net imports of biodiesel in the United States are expected to drop to zero, down from 20,000 bpd. In 2025, renewable diesel imports will drop to -10000 bpd from 30,000 bpd.

The agency said that structural changes in the data had made it appear as if there was a larger decrease in net renewable diesel imports. The EIA's renewable fuel net imports data before 2025 only included imports, but since then the agency has added renewable diesel exports.

The agency stated that "in this forecast, we assumed about half the decline in net renewable diesel imports in 2025 was due to exports and the other half due to tax credit changes." (Reporting and editing by Paul Simao; Additional reporting by Shariq Khan; Reporting by Stephanie Kelly)

(source: Reuters)