Biofuel Producers Benefit as Renewable Fuel Credits Approach Record Levels, EIA Says

Higher US biofuel blending targets have pushed renewable fuel credit prices close to record highs and improved returns for ethanol, biodiesel and renewable diesel producers, the US Energy Information Administration said Wednesday.

Higher US biofuel blending mandates have doubled renewable fuel credit prices this year, while stronger gasoline and diesel markets improved biofuel economics, the EIA said.

The federal renewable fuels program allows companies to earn tradable credits when they bring biofuels into the US fuel market, either through domestic production or imports, the EIA said.

Fuel suppliers that fall short of government biofuel requirements can purchase those credits to satisfy compliance obligations, while others meet the targets by blending renewable fuels directly into gasoline and diesel.

As of June 4, biomass-based diesel D4 credits traded at $2.41 and ethanol D6 credits traded at $2.37, both approaching the record levels reached in 2021, according to the agency.

At current prices, biodiesel and renewable diesel producers can generate more than $3.50 per gallon from renewable fuel credits. Biodiesel creates 1.5 credits per gallon, while renewable diesel generates between 1.6 and 1.7 credits.

The Environmental Protection Agency helped drive the increase after finalizing a rule on March 27 that raised renewable fuel blending requirements for both 2026 and 2027 above 2025 levels, the agency said.

Higher gasoline and diesel prices have also improved biofuel economics. Since mid-March, ethanol on the US Gulf Coast has generally remained cheaper than gasoline on an energy-equivalent basis, encouraging additional blending.

After including the value of renewable fuel credits, ethanol traded at a discount of more than $2 per gallon to gasoline during May and June, making it increasingly attractive for fuel suppliers, according to the agency.

Higher renewable identification number, or RIN, prices have improved production and blending margins for biodiesel and renewable diesel producers in 2026, the EIA added.

The agency said the Bean Oil-Heating Oil, or BOHO, spread remains a key measure of biodiesel and renewable diesel economics because it tracks the relationship between soybean oil feedstock costs and heating oil prices.

RIN values have risen faster than the BOHO spread this year, indicating that higher renewable volume obligations are providing an additional boost to margins and supporting significantly stronger biodiesel and renewable diesel economics than in 2025, according to the agency.

The Energy Information Administration expects record fuel ethanol and renewable diesel production in 2026 as higher blending mandates, stronger fuel prices and expanding biofuel capacity support output growth. Biodiesel production is also forecast to increase but remain below previous record highs.

Fuel ethanol production is projected to rise 2% in 2026, with its share of gasoline consumption increasing to 10.7% from 10.5% in 2025, according to the EIA.

Renewable diesel output is expected to increase 24% and biodiesel production 41% from 2025 levels, while all three fuels are forecast to post further gains in 2027 as renewable volume obligations rise again.

US Natural Gas Update: Futures Edge Down on Cool Weather Forecasts

US natural gas futures softened further in after-hours trading on Tuesday as abundant supply and mild weather forecasts outweighed demand signals.The front-month Henry Hub contract and the continuous benchmark both eased 0.29% to $3.138 per million British thermal units."Price action remains largely rangebound, with weekly changes still limited to only a few cents across most of the curve," Pinebrook Energy Advisors said in a note.Weather expectations remain a key driver. Cooler-than-normal temperatures forecast for June 14-18 across the Midwest and eastern US are expected to curb air-conditioning demand and put pressure on prices, according to Barchart, citing Vaisala data.It also said Lower-48 natural gas demand rose to 73.2 billion cubic feet per day on Tuesday, up 0.8 Bcf/d from the previous session and 5.8% higher over the year.The US Energy Information Administration's outlook shows a split summer demand profile, with June notably weak before demand strengthens later in the season.For June, the EIA forecasts 240 cooling degree days, down 15% over the year and 9% below the 10-year average, signaling reduced air-conditioning demand at the start of summer.Conditions then tighten into the third quarter, with CDDs rising 8% from a year earlier as hotter weather boosts cooling demand. That late-summer strength is expected to offset the soft start in June.Overall, the EIA still projects 2026 cooling demand averaging 4% above 2025 and 4% above the 10-year average, indicating firmer underlying summer consumption despite the early weakness.Daily US dry gas production was reported at 110.1 Bcf/d on Tuesday, down 2 Bcf/d from the prior day but still up 2.2% over the year, BNEF data showed.The EIA expects US gas output to rise 3.3% in 2026 to 111.0 Bcf/d, with further growth in 2027 driven by Permian associated gas and Haynesville output.Despite steady demand growth, elevated production is expected to keep inventories above the five-year average and cap upside in Henry Hub prices. The EIA projects prices averaging $3.34/MMBtu in the second half of this year and $3.46/MMBtu in 2027, down sharply from prior forecasts.LNG feedgas flows to US export terminals also increased, reaching 17.9 Bcf/d, up 0.3 Bcf/d on the day and 8.7% higher over the week.

EPA Extends Waiver For Summertime National Sales of E15 Blended Gasoline

The Environmental Protection Agency and the US Department of Energy on Tuesday extended the summertime waiver for the sales of E15 blended gasoline through June 29.The waiver regarding the requirements in 40 CFR 1090.215 allows for the production and distribution of a single national gasoline pool with 9% to 15% ethanol content at a common Reid Vapor Pressure standard of 10 pounds per square inch, according to the EPA announcement.In the same waiver letter, EPA is reissuing a waiver for federal enforcement of state-level "boutique" fuel requirements for gasoline under 40 CFR 1090.215. Both waivers share a 20-day effective window from June 10, 2026, to June 29, 2026.The EPA noted that states that have adopted fuel standards under consumer protection and/or air quality statutes may need to waive those provisions in State code to enable implementation of the Federal waiver in the States.In May, the EPA extended a waiver allowing the nationwide summer sales of E15, effective until June 9.

Biofuel Producers Benefit as Renewable Fuel Credits Approach Record Levels, EIA Says

Related Articles

US-Iran Tensions Escalate as Centcom Launches 'Self-Defense' Strikes Following Helicopter Incident

US Natural Gas Update: Futures Edge Down on Cool Weather Forecasts

EPA Extends Waiver For Summertime National Sales of E15 Blended Gasoline

Related Articles

Commodities1d ago
US-Iran Tensions Escalate as Centcom Launches 'Self-Defense' Strikes Following Helicopter Incident

Commodities1d ago
US Natural Gas Update: Futures Edge Down on Cool Weather Forecasts
US natural gas futures softened further in after-hours trading on Tuesday as abundant supply and mild weather forecasts outweighed demand signals.The front-month Henry Hub contract and the continuous benchmark both eased 0.29% to $3.138 per million British thermal units."Price action remains largely rangebound, with weekly changes still limited to only a few cents across most of the curve," Pinebrook Energy Advisors said in a note.Weather expectations remain a key driver. Cooler-than-normal temperatures forecast for June 14-18 across the Midwest and eastern US are expected to curb air-conditioning demand and put pressure on prices, according to Barchart, citing Vaisala data.It also said Lower-48 natural gas demand rose to 73.2 billion cubic feet per day on Tuesday, up 0.8 Bcf/d from the previous session and 5.8% higher over the year.The US Energy Information Administration's outlook shows a split summer demand profile, with June notably weak before demand strengthens later in the season.For June, the EIA forecasts 240 cooling degree days, down 15% over the year and 9% below the 10-year average, signaling reduced air-conditioning demand at the start of summer.Conditions then tighten into the third quarter, with CDDs rising 8% from a year earlier as hotter weather boosts cooling demand. That late-summer strength is expected to offset the soft start in June.Overall, the EIA still projects 2026 cooling demand averaging 4% above 2025 and 4% above the 10-year average, indicating firmer underlying summer consumption despite the early weakness.Daily US dry gas production was reported at 110.1 Bcf/d on Tuesday, down 2 Bcf/d from the prior day but still up 2.2% over the year, BNEF data showed.The EIA expects US gas output to rise 3.3% in 2026 to 111.0 Bcf/d, with further growth in 2027 driven by Permian associated gas and Haynesville output.Despite steady demand growth, elevated production is expected to keep inventories above the five-year average and cap upside in Henry Hub prices. The EIA projects prices averaging $3.34/MMBtu in the second half of this year and $3.46/MMBtu in 2027, down sharply from prior forecasts.LNG feedgas flows to US export terminals also increased, reaching 17.9 Bcf/d, up 0.3 Bcf/d on the day and 8.7% higher over the week.

Commodities1d ago
EPA Extends Waiver For Summertime National Sales of E15 Blended Gasoline
The Environmental Protection Agency and the US Department of Energy on Tuesday extended the summertime waiver for the sales of E15 blended gasoline through June 29.The waiver regarding the requirements in 40 CFR 1090.215 allows for the production and distribution of a single national gasoline pool with 9% to 15% ethanol content at a common Reid Vapor Pressure standard of 10 pounds per square inch, according to the EPA announcement.In the same waiver letter, EPA is reissuing a waiver for federal enforcement of state-level "boutique" fuel requirements for gasoline under 40 CFR 1090.215. Both waivers share a 20-day effective window from June 10, 2026, to June 29, 2026.The EPA noted that states that have adopted fuel standards under consumer protection and/or air quality statutes may need to waive those provisions in State code to enable implementation of the Federal waiver in the States.In May, the EPA extended a waiver allowing the nationwide summer sales of E15, effective until June 9.