Higher targets, tighter markets: the new reality under the updated US Renewable Fuel Standard

The United States Renewable Fuel Standard enters a new phase with Set 2, introducing unprecedented increases to biomass-based diesel and advanced biofuel targets. Higher Renewable Volume Obligations place greater compliance burdens on refiners and importers, demanding a structural supply response. Meeting elevated mandates requires ~90% utilisation across domestic biodiesel and renewable diesel capacity, the restart of idled plants, stronger imports and redirected exports. Producer economics remain challenged following the shift from the Blender's Tax Credit to the 45Z scheme, with D4 RINs emerging as the critical marginal compliance credit. Higher RIN prices will be essential to incentivise supply growth. Feedstock constraints and elevated import costs are expected to tighten RIN balances, with a potential deficit by 2027. Policy intervention may be required if supply fails to keep pace with targets.