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Renewable Fuel Stocks Fall as RNG Weakness Persists, TPH Says

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Renewable fuel stocks fell last week as weakness in renewable natural gas firms overshadowed improving profit margins across several low-carbon fuel markets, TPH Energy Research said in a Monday note.

Matthew Blair, analyst at TPH Energy, said that the renewable fuels sector declined 3% during the week, slightly worse than the S&P 500's 2.6% drop, with RNG-focused companies accounting for the four worst-performing stocks in the group.

Agribusiness companies with exposure to biofuel feedstocks fared better. TPH said that Soybean crushers Bunge and Archer-Daniels-Midland were among the top performers, gaining 2.6% and 1.4%, respectively, as processing margins continued to improve.

Margins for renewable diesel strengthened significantly, with low-carbon intensity renewable diesel indicators rising by $0.27 to $0.29 per gallon.

The gains were driven by higher ultra-low sulfur diesel prices and stronger D4 Renewable Identification Number credits, while feedstock costs remained largely unchanged.

RNG economics also improved despite the weakness in sector equities. Indicators for both landfill gas and dairy-based RNG increased by about $1 per million British thermal units, supported by stronger D3 RIN values.

Elsewhere, Midwest ethanol margins rose $0.3 per gallon as corn prices eased, while soybean crushing margins increased by about $10 per metric ton on lower soybean costs.

TPH said the renewable fuels sector is currently trading at a forward enterprise value-to-EBITDA multiple of 8.9 times, broadly in line with its three-year average valuation. Meanwhile, policy and regulatory developments continued to dominate investor attention.

Renewable natural gas industry groups launched legal challenges against the US Environmental Protection Agency's decision to reduce the 2025 cellulosic biofuel Renewable Volume Obligation and exclude electric vehicle charging credits from the Renewable Fuel Standard program.

Simultaneously, the American Fuel & Petrochemical Manufacturers filed its own lawsuit challenging the EPA's biofuel blending mandates for 2026/27.

Germany's revised renewable fuel legislation came into effect, introducing new compliance requirements for fuel suppliers and renewable energy producers.

On the corporate front, renewable fuels producer Clean Energy Fuels began commercial production of RNG at its Millenkamp dairy project in Idaho, adding to the company's portfolio of renewable gas assets that supply the transportation sector.

Though improving margins supported fundamentals, TPH analysts said investors remained cautious amid ongoing policy uncertainty and legal disputes surrounding US renewable fuel mandates.

Price: $126.44, Change: $-0.02, Percent Change: -0.02%

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