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Biodiesel demand in 2026 and 2027 rests on the mandates

Nearly every large market raised its blending obligations this year. Expensive oil helped margins, but the law sets the volume.

· Charlene Trading

The year started with a price shock. The war with Iran that began in late February sent Brent from about $72 to close to $120 at the peak, and it was still near $90 in August with traffic through Hormuz far below normal. US heating oil set an all-time high of $4.79 a gallon on 9 September.

Expensive diesel makes blending biodiesel cheaper by comparison. The tonnes actually burned are set by blending mandates, and in 2026 those went up in the United States, Indonesia, Germany and Malaysia.

MarketChangeFrom
United States8.86 bn biomass-based diesel RINs, 67% more than 20252026
IndonesiaB50 nationwide1 October 2026
GermanyGHG reduction quota from 12% to 17.5%2027
MalaysiaB15 in the peninsula1 June 2026

United States

EPA’s final Renewable Fuel Standard volumes, released in late March, set biomass-based diesel at 8.86 bn RINs for 2026 and 8.95 bn for 2027. That is about 5.5 bn physical gallons a year and well above the June 2025 proposal. With the volumes reallocated from small refinery exemptions, the totals are 9.07 bn and 9.20 bn.

Producers reacted fast. Renewable diesel output fell to 151,000 barrels a day in January, while the industry waited for the rule, and was back at 258,000 by June. EIA expects renewable diesel to average 232,000 barrels a day in 2026 and 287,000 in 2027, against 192,000 in 2025. Biodiesel goes from 75,000 to about 100,000 and 108,000.

USDA puts soybean oil used for biofuel at 14.8 bn lb in 2025/26 and 17.8 bn lb in 2026/27, on a record crush of 2.78 bn bushels. US soybean oil exports fall to 400 million lb in 2026/27, from 2.47 bn two seasons earlier.

Europe

EU consumption of biomass-based diesel grew 4.1% in 2025, and USDA expects another 2.8% in 2026. The total grows slowly, but the accounting changed. Germany and the Netherlands stopped double counting waste-based biofuels from 2026. A tonne of UCO biodiesel that used to count twice toward the quota now counts once, so meeting the same obligation takes more tonnes. On top of that, Germany’s quota rises from 12% in 2026 to 17.5% in 2027.

Aviation adds demand. EU fuel suppliers delivered 1.1 Mt of SAF in 2025, 2.79% of jet fuel, above the 2% mandate. Almost all of it was made from used cooking oil, and 85% of the feedstock was imported. The mandate rises to 6% in 2030.

Indonesia, Brazil and Argentina

Indonesia cancelled B50 for 2026 in January and changed course after the oil shock. B50 took legal effect on 1 July and reached the whole country on 1 October. GAPKI, the palm oil association, estimates the country needs about 5.3 Mt more crude palm oil a year, out of output of roughly 46 Mt. Exports still grew 5.8% in the first half, but the industry expects less palm available for export from here.

Brazil stays at B15. B16 was due in March and slipped because engine tests were not finished. In July the national energy policy council (CNPE) kept B15 and stopped counting imported biodiesel toward the mandate. The law still points to B20 by 2030, and Brazilian airlines must start cutting emissions with SAF in January 2027.

In Argentina, the Senate passed a biofuels reform on 19 September that would raise blends from 2027. Press reports put the biodiesel level at B10 or B12, depending on the outlet. The lower house still has to vote.

Prices

The IEA raised its forecast of biofuel demand growth between 2025 and 2030 by 50%, with SAF going from about 1 bn litres in 2024 to 9 bn in 2030. The World Bank expects soybean oil at $1,233 a tonne in 2026 and $1,236 in 2027, and palm at $1,089 and $1,096. It sees Brent at $86 in 2026 and $70 in 2027. With oil back at $70, margins get thinner, while the US, Indonesian and German mandates still require the blending.

In the US, profitability depends more on RIN prices than on diesel. D4 RINs moved between about $1.90 and $2.40 from June to September as news on refinery exemptions came and went.

Sources