Feedstock constraints test US biofuels growth as supply struggles to keep pace: Biofuels and Feedstocks event 2026

The discussion centered on whether the US has sufficient feedstock supply to meet rising Renewable Volume Obligations (RVOs), with speakers pointing to a growing gap between domestic production and total demand that will likely require both imports and continued expansion in vegetable oils.

Nathan Burke, senior vice president of fats, oils and greases at StoneX, said that in 2024 roughly 3.35 billion gallons of domestic feedstocks entered the D4 Renewable Identification Number (RIN) pool, alongside approximately 1.4 billion gallons of imported feedstocks and 900 million gallons of imported finished fuel.

Looking ahead, he said the market may require closer to 6.5 billion gallons of total supply to meet effective obligations once small refinery exemptions and RIN bank dynamics are considered, implying a significant shortfall between domestic supply and overall demand.

Burke added that domestic feedstock production could increase to around 3.7 billion-4 billion gallons, driven primarily by expansion in soybean oil and other vegetable oils. Even at those levels, however, domestic supply alone would remain insufficient, reinforcing the need for both imported feedstocks and finished fuels to balance the market.

Panelists broadly agreed that soybean oil and canola offer the main long-term runway for growth, while lower-carbon waste feedstocks such as used cooking oil (UCO), tallow and distillers corn oil (DCO) are fundamentally constrained and becoming increasingly strategic.

Several speakers noted that tightening availability has increasingly pushed producers and traders to secure supply through acquisitions, partnerships and greater integration with collection networks, particularly in UCO markets.

Burke estimated US UCO supply at roughly 300 million-325 million gallons, adding that the industry is likely nearing its practical ceiling despite improved collection driven by higher prices.

“We’re not going to fry more food to get more used cooking oil,” he said.

Biofuel feedstocks

John Cusick, chief strategy officer at Green Sky Innovations, said these structural limits make waste feedstocks the key bottleneck to future biofuels growth, even as global demand continues to expand.

“We cannot skyrocket growth with the most prized feedstocks in the market globally,” he said.

Cusick added that companies that acquired UCO collection businesses during weaker margin environments now appear well-positioned as feedstock valuations rebound.

Kent Swisher, president and chief executive officer of the North American Renderers Association, said animal fats face similar constraints because supply is tied directly to slaughter rates and cannot be materially increased in response to demand.

The US once exported more than 1 million metric tonnes of tallow annually, Swisher added, but rising domestic biofuels demand has increasingly kept those volumes at home while also increasing reliance on imports.

Swisher also noted that demand for higher-quality edible tallow has risen sharply in recent years due to growing food applications, creating a separate demand stream from biofuels markets.

Despite these constraints, panelists agreed that the domestic oilseed industry remains positioned to expand.

Ryan Locke, vice president at the National Oilseed Processors Association (NOPA), said previous policy signals drove roughly $6 billion in investment and rapid growth in crush capacity and that the sector is prepared to respond if demand visibility remains strong.

“The industry is ready to meet this moment,” he said.

45Z tax credit

At the same time, panelists emphasized that the shift from the blender’s tax credit to the 45Z clean fuel production credit has fundamentally changed how feedstocks are priced.

Under the previous structure, feedstocks received broadly similar support, Burke said, whereas 45Z introduces differentiated values based on carbon intensity.

“The fats have a little bit more credit value than soybean oil and vegetable oils and then used cooking oil and distillers corn oil have an increased value,” Burke said, adding that markets are now increasingly driven by carbon intensity and end-use economics rather than flat commodity pricing.

Burke also said some market participants are increasingly using heating oil futures to hedge feedstock exposure, particularly in UCO markets where prices remain closely tied to broader energy markets.

Joe Jobe, chief executive officer of the SABR Coalition, said uncertainty around 45Z implementation continues to weigh on the market, particularly given unresolved questions surrounding emissions modeling and credit calculation.

“There are some things about 45Z that the market doesn’t know how to deal with yet,” he said.

Panelists also noted that the transition has created cash flow challenges, with many producers still waiting to monetize credits tied to 2025 production.

Another challenge Swisher highlighted that is often overlooked is theft within the UCO market, which he estimated accounts for roughly 25%-30% of material and is increasingly linked to organized criminal networks.

He added that federal authorities, including the FBI, have become more involved as investigations expand, while stolen material often re-enters legitimate supply chains, raising concerns around traceability and market integrity.

Looking ahead, panelists pointed to emerging feedstocks such as camelina as a potential source of additional supply, particularly for sustainable aviation fuel (SAF).

Cusick said camelina has gained traction due to existing regulatory pathways and its low carbon intensity profile, although scaling challenges remain, particularly around developing end uses for meal, which makes up the majority of crush output.

“We saw opportunity with the meal,” he said, pointing to work on biodegradable materials alongside future fuel applications.

Panelists said future market growth will depend on balancing expanding vegetable oil production, imported feedstocks, emerging crop pathways and increasingly complex carbon intensity-driven economics as mandate-driven demand continues to rise.

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