Oils and Fats: Beware of the Biodiesel Hype

The Biodiesel Program refers to a suite of mandatory or incentive-based policies enacted by governments worldwide to reduce dependence on fossil fuels, lower greenhouse gas emissions, enhance energy security, and support domestic agriculture—particularly oilseed crop cultivation. Its core mechanism is typically mandatory blending: requiring a fixed volume percentage of biodiesel to be mixed into conventional petroleum diesel. In light of current global policy developments (2025–2026), here is a detailed analysis of the Biodiesel Program: Core Operational Model: The Bxx Standard Biodiesel programs are commonly denoted by “Bxx,” where “xx” indicates the volume percentage of biodiesel in the blended fuel. For example: B30 means 30% biodiesel + 70% petroleum diesel; B50 means an equal 50/50 blend. Objective: Governments legislatively raise this mandated blending ratio year after year (e.g., from B20 → B30 → B40) to forcibly generate massive domestic demand for biodiesel. Major Countries’ Biodiesel Programs (as of 2025–2026) Currently, the most aggressive and impactful biodiesel programs globally are concentrated in Indonesia, the United States, Brazil, and the European Union. A. Indonesia: The World’s Most Aggressive “Palm Oil” Program Indonesia—the world’s largest palm oil producer—designed its biodiesel program primarily to absorb domestic palm oil output and eliminate diesel imports. Current Status: 2025: Official implementation of the B40 mandate (40% palm-oil-based biodiesel + 60% diesel). The government has issued regulations allocating approximately 15.6 million kiloliters of blending quotas. 2026 Target: Full rollout of the B50 mandate. Indonesia’s Minister of Energy announced the goal of achieving complete diesel import independence and full energy self-sufficiency by 2026. Impact: This will consume roughly 38–40% of Indonesia’s total palm oil production, drastically tightening global palm oil export supply and pushing up international edible oil prices. B. United States: The “Soybean Oil” Program under the Renewable Fuel Standard (RFS) The U.S. biodiesel program is administered by the Environmental Protection Agency (EPA) under the Renewable Fuel Standard (RFS), with soybean oil as the primary feedstock. Latest Developments (2025–2026): The EPA revised its 2025 rule, significantly increasing the biomass-based diesel blending obligations for 2026 and 2027. 2026 Obligation: Biomass-based diesel renewable fuel volume requirements are projected to surge from ~3.35 billion gallons in 2025 to 5.2–5.6 billion gallons in 2026. Impact: This will generate hundreds of thousands of additional tons of industrial soybean oil demand—directly benefiting the U.S. soybean crushing industry—and producing spillover effects across the global vegetable oil market. C. Brazil: A Mature “Soybean/Beef Tallow” Blending Program Brazil is one of the world’s pioneers in biodiesel application. Current Status: Brazil maintains long-standing high-blend mandates.

The Most Expensive U.S. Treasury Bonds in 25 Years Have Just Emerged. The Fed Has Not Raised Rates—Yet Markets Have Already Completed a Round of 'Passive Rate Hikes.' What Are the Implications? Why Have Treasury Yields Soared?

According to foreign media citing two U.S. officials, North American Blue Energy Partners (NABEP), a U.S. oil company, will take over certain oil fields previously controlled by a Russian firm and five other international companies. Officials stated that this acquisition forms part of a comprehensive oil production agreement recently announced by President Trump and Venezuela. Official sources confirmed that these projects constitute part of a newly awarded package of 14 contracts granted to NABEP. Previously owned by U.S. oil tycoon Harry Sargent, NABEP is now controlled by Venezuelan businessman Alejandro Betancourt. Moreover, as the Trump administration seeks to restructure Venezuela’s oil industry and integrate its vast petroleum reserves into U.S. economic and geopolitical interests, this arrangement also grants Washington direct influence over decisions regarding Venezuela’s oil production and sales. (Could some of Trump’s personal interests also stand to benefit?) U.S. President Trump, speaking at the White House on Monday local time, said: “Last night, many ships passed through the Strait of Hormuz—about 30 vessels per night. There is a huge volume of oil flowing out of the Strait of Hormuz.” On future developments, he remarked: “Iran may be struck; we’ll just have to wait and see. I think even the Iranians themselves don’t know who their leader is—nobody knows who Iran’s leader is. Iran is a failed state.” He also commented on interest rates: “Rates are currently too high. I have great respect for Fed Chair Walsh—he’ll do what he must.” According to two informed sources, the Trump administration expects to approve, as early as Monday, an expansion of exemptions from U.S. refiners’ biofuel blending requirements—aimed at alleviating upward pressure on gasoline prices. Although refiners have long sought broader exemptions to lower fuel production costs, lawmakers from agricultural states have urged the White House not to exceed the exemption levels announced earlier this year. Farmers fear such exemptions would dampen demand for crops, and there remains disagreement between stakeholders over whether expanding exemptions would meaningfully lower gasoline prices. Sources indicated that the U.S. Environmental Protection Agency (EPA) is expected to grant the latest annual round of exemptions to a group of small refineries—covering more than 1.8 billion Renewable Identification Numbers (RINs). Companies applying for exemptions include major oil firms Marathon Petroleum and Chevron. This figure would be roughly double the number of carbon credit allowances the agency originally planned to issue this year. Sources added that, under active lobbying by lawmakers from agricultural states and their allies, the EPA is considering a plan to reopen the 2027 biofuel blending mandate and increase the RINs allocation by approximately 500 million (or possibly more) credits—to offset the adverse impact of expanded exemptions on farmers. A reader previously asked a similar question: “Is this bullish for corn and soybean oil?” That interpretation is backwards! The EPA enforces a mandatory requirement: refiners must blend a specified proportion of ethanol (primarily derived from corn) into gasoline, and a specified proportion of biodiesel (primarily derived from soybean oil) into diesel. If refiners choose not to blend, they must purchase Renewable Identification Numbers (RINs)—a type of compliance credit—to meet their regulatory obligations.

EPA Confirms 100% Reallocation for Refinery Biofuel Exemptions

Oct 13, 2026

The EPA announced it will reallocate 100% of unused biofuel exemption volumes from 2025 to 2026-2027 obligations, aiming to support American farmers and stabilize demand for corn and soy-based fuels despite recent refinery breaks.

bloomberg

EPA Proposes Full Reallocation of Refinery Biofuel Exemptions

reuters

2026-04-01

EPA Proposes Exempting Plastic Pyrolysis Plants from Clean Air Act

2026-04-02

EPA bolsters biofuels with blending actions

2026-05-01

EPA Budget Hearing Ignores Budget

2026-05-19

EPA proposes rescinding drinking-water limits for 4 PFAS