Renewable Diesel Production to Rise in 2026

by Ed Burke and Kelly Burke, Dennis K. Burke Inc.

As production rises, increased availability and cost competitiveness is sure to follow.

Dennis K. Burke has been delivering renewable diesel for about 18 months now. Our customers are primarily looking for pure renewable diesel (R99), but if they want it blended with ULSD we can accommodate them. Renewable diesel at the rack in the Northeast is still a little spotty. It is available at the rack in a lot of places, but not universally. We generally pull renewable diesel from three terminals in different states.

EIA Projections For Renewable Diesel

According to the latest Energy Information Administration (EIA) report, projections for renewable diesel in 2025 have been reduced, but it has maintained its projections for significant growth in 2026. The key factor for the reduced 2025 projections is tax credit uncertainty regarding the new Clean Fuel Production Credit (45Z), which replaced the former blender’s tax credit in 2025. Guidance delays have caused some producers to slow down or idle operations while they assess profitability. The shift in tax policy has also made imported biofuels less economically attractive.

The EIA forecasts a ramp-up in production for late 2025 and 2026, assuming increased capacity comes online as the year progresses and producers meet federal renewable fuel mandates. Despite growth, the EIA forecasts that renewable diesel production will remain below the total potential production capacity. High feedstock prices and less-than-full utilization of plants could limit production.

It is worth noting that the EIA has also observed that as renewable diesel production expands, a corresponding decrease in biodiesel production is expected, particularly from less-efficient plants struggling with high feedstock costs.

The EIA projects the U.S. will become a net exporter of renewable diesel in 2025 and 2026, a sharp change from 2024. They also project that the increase in renewable diesel production is expected to also facilitate growth in co-products, such as sustainable aviation fuel (SAF) and renewable naphtha. 

Renewable diesel is a “drop-in” replacement for petroleum diesel. Like biodiesel, renewable diesel is made from renewable resources (rather than derived from fossil fuels like conventional diesel). However, unlike biodiesel, renewable diesel is chemically identical to petroleum-based diesel, and meets the same ASTM spec, so it is completely compatible at any blend level and there are no concerns about differing properties when it comes to filters, fittings, or the temperature at which the equipment is operating. Renewable diesel is a truly “drop-in” replacement, so no tank draining, engine retrofitting, or special handling is required to switch over or blend in any desired percentage of R99 to existing equipment.

BETTER PERFORMANCE

Renewable diesel generally offers better performance than conventional diesel fuel in several key areas, including a higher cetane number, cleaner burn, and comparable energy output. As a “drop-in” fuel, it can be used in any diesel engine without modifications, and it has excellent cold-weather performance. 

Renewable diesel boasts a higher cetane number than conventional diesel, which means improved engine efficiency.

It has essentially zero sulfur content and its lower density means cleaner burning, cleaner emissions, and fewer deposits throughout the exhaust system (which means less lifetime maintenance on your equipment).

Better lubricity also means less wear and tear on fuel injectors and fuel pumps, and smoother operation. 

BIODIESEL COMPARISONS

Renewable diesel and biodiesel are both made from fats and oils, but they are chemically distinct due to different production processes.

Renewable diesel is produced through a hydrotreating process that reacts fats and oils with hydrogen under high heat and pressure. Biodiesel is made through a simpler chemical reaction called transesterification, which uses an alcohol (usually methanol) and a catalyst.

Renewable diesel is a pure hydrocarbon that is chemically identical to petroleum diesel, but without impurities like sulfur and aromatics. The production process also removes oxygen from the feedstock. Biodiesel retains some of that oxygen in its chemical structure, making it different from petroleum diesel. Renewable diesel also reduces GHG emissions from heavy-duty vehicles by approximately 62 percent compared to petroleum diesel.

Renewable diesel has excellent cold-weather properties. Its chemical composition allows it to resist gelling at very low temperatures, with some grades having a freeze point as low as -40°F. Biodiesel is prone to gelling in cold weather, which can lead to clogged fuel filters and engine problems.

Renewable diesel can be stored and transported using existing petroleum infrastructure, including pipelines. Biodiesel requires separate storage and handling to prevent contamination and degradation. It also cannot be transported through existing pipelines.

Renewable diesel has excellent stability and a long shelf life, while biodiesel is more susceptible to microbial growth, oxidation, and water absorption, giving it a shorter shelf life.

COST AND AVAILABILITY

Renewable diesel is typically more expensive to produce than biodiesel because its hydrotreating process is more complex and energy-intensive.

However, pricing can vary significantly depending on feedstock costs, government incentives, and location. In areas with strong low-carbon fuel standards (such as California, Oregon, and Washington), it is more widely available and can be cost-competitive with petroleum diesel.

The availability of renewable diesel is still geographically limited compared to petroleum diesel but is rapidly expanding, with significant production growth projected in the coming years. 

As production scales, renewable diesel is expected to become more widely available and cost-competitive with other fuels.

Ed and Kelly Burke are respectively Chairman of the Board and Senior Marketing Manager at Dennis K. Burke Inc. They can be reached at 617-884-7800 or ed.burke@burkeoil.com and kelly.burke@burkeoil.com.

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