The U.S. biofuel goals set by the Trump administration for 2026 face an industrial obstacle: U.S. renewable diesel and sustainable aviation fuel (SAF) plants are operating significantly below the capacity that the Environmental Protection Agency (EPA) assumed when establishing the Renewable Fuel Standard (RFS) targets. According to industry data cited by Reuters, biodiesel facilities operated at 77% of their capacity in May, and renewable diesel plants at 78%, compared to the 90% assumed by the EPA in its projections.
The result for U.S. biofuel goals is a growing gap between the demand for regulatory credits (RINs) and actual production capacity. In May, refineries generated 736 million RINs, compared to the 915 million per month that would be needed to meet the annual mandate of 8.86 billion RINs established by the EPA, equivalent to 5.4 billion gallons of biodiesel and renewable diesel.
U.S. biofuel goals: why plants are not keeping pace
The factors explaining the lag are multiple and reinforce each other. The first is regulatory uncertainty: for months, producers held back part of their production while waiting for the Trump administration to define the rules for the 45Z clean fuel production tax credit. The lack of guidance on land-use requirements and the eligibility of different feedstocks generated a period of paralysis in operational and expansion decisions.
The second factor is the price disruption derived from the conflict with Iran. The rise in conventional oil prices improved the margins of conventional refineries, reducing the relative incentive to produce renewable fuels. Part of the renewable diesel production was also directed toward export contracts that offered better prices, but whose volumes do not generate RINs that count toward federal mandate compliance.
The third element is the progressive depletion of the accumulated RIN bank. This inventory of unused credits acts as a cushion that allows refineries to cover periods of low production. Its sustained depletion during 2026 reduces the system’s margin of tolerance and increases pressure on producers to increase the rate of credit generation before the end of the year.
Technical challenges in biorefineries: commissioning and operation
Beyond the regulatory and pricing context, the lag also has technical and industrial causes. Renewable diesel and SAF plants are highly complex facilities that integrate hydrotreating processes, feedstock pretreatment, hydrogen management, and catalyst control. Their commercial startup at full capacity faces asset integrity challenges inherent to any new chemical process: heat exchanger fouling, accelerated catalyst wear, adjustments in managing feedstocks with high composition variability, and compatibility issues between process equipment.
The limited availability of low-carbon feedstocks—used vegetable oils, animal fats, recycled cooking oils—introduces an additional constraint on production capacity. These inputs have more fragmented and less predictable supply chains than conventional refining feedstocks, which generates variability in production plans and complicates the operational optimization of the plants.
For operational reliability and process engineering firms, the current scenario in U.S. biorefineries represents a significant field of action: optimizing utilization rates, improving preventive maintenance programs, and managing feedstock variability are areas where technical intervention can translate directly into production increases and regulatory compliance.
Impact on refining, CAPEX, and energy transition
Major U.S. refineries that had announced conversions to renewable fuels will review their investment schedules in light of this situation. The return on CAPEX invested in a new renewable diesel unit depends directly on the ability to operate at high utilization rates: an asset operating at 77-78% compared to a plan of 90% significantly reduces the recovery of investment and may lead to delaying or canceling additional expansion phases.
In the refining and petrochemicals segment, the RFS mandate also pressures conventional refineries that do not produce their own renewable fuels: they must acquire RINs in the secondary market to meet their regulatory obligation. If the credit bank is exhausted before the end of the year and production does not accelerate, the price of RINs could escalate, raising compliance costs for the sector as a whole.
In this context, U.S. biofuel goals remain a difficult target to achieve. The EPA has indicated that it evaluates compliance on an annual basis and that the accumulated credit mechanisms are designed to absorb monthly fluctuations. However, if the gap between actual production and the regulatory goal persists during the second half of the year, the agency could be pressured to revise the energy transition targets for 2028, including changes in how imported volumes of renewable fuels are counted toward federal obligations.
The current outlook for U.S. biofuel goals reflects a structural tension between political ambition and industrial reality. While the government maintains its objectives, U.S. biofuel goals can only be achieved if the sector expands its production capacity in a sustained manner.
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