The North American biofuels industry is scaling back production as U.S. President Donald Trump’s tariff policies and uncertainty over green fuel subsidies create market turmoil. U.S. and Canadian biofuel producers, facing rising costs and shrinking margins, are idling plants and shelving expansion projects, threatening rural economies and decarbonization efforts.
Key Developments:
Production Cuts: U.S. biodiesel output hit a five-year low in January, with renewable diesel production down 17% from 2024 averages.
Project Delays: Federated Co-operatives halted a renewable diesel and canola processing plant in Saskatchewan, part of a plan to expand Canada’s canola crush capacity by 60%.
Policy Uncertainty: Trump’s administration has yet to clarify rules for the 45Z tax credit, a Biden-era incentive for low-carbon biofuels, leaving producers unable to price feedstocks effectively.
Trade Impact:
Tariffs: Trump’s 25% duties on Canadian canola and biofuel imports, set to take effect April 2, threaten $6.02 billion in annual trade.
Market Glut: U.S. biodiesel and renewable diesel capacity has grown 60% since 2022, but oversupply and weak demand are squeezing margins.
Economic Fallout:
Farmers: Canola prices have dropped by up to $100/metric ton, while U.S. soybean growers plan to reduce plantings amid a supply glut.
Processors: Industry giants like Archer-Daniels-Midland (ADM) and Bunge warn of six-year low earnings in 2025.
Industry Calls for Action:
Producers urge the Trump administration to increase biofuel volumes under the Renewable Fuel Standard (RFS), which currently supports only 3.35 billion gallons/year—far below the industry’s 5 billion-gallon capacity.