If the U.S. Environmental Protection Agency (EPA) sets aggressive renewable volume obligations under the Renewable Fuel Standard (RFS) without a Congressional extension of the “Section 40A” biodiesel blenders’ tax credit, diesel prices could be significantly impacted, said NACS; NATSO, representing truck stops and travel centers; and SIGMA: America’s Leading Fuel Marketers.

In a letter to EPA Administrator Lee Zeldin, the associations, who together represent more than 90% of fuel sold at retail, noted, “Our members have grave concerns that setting volumes for total advanced biofuel at levels that the market is unable to economically absorb will result in steep increases in [RIN] prices and, by extension, in the retail price of diesel. Unrealistic mandates, particularly when they are not paired with the relief that the [blenders’ tax credit] could help provide, would be destructive of the market and impose palpable inflationary pressures that will hit American consumers directly in their wallets every time they buy virtually any good in the nation.”

The letter noted that fuel retailers support policies that enhance energy independence and support abundant, stable energy sources and that biofuels represent a key component of ensuring a stable fuel supply. Extending the $1 per gallon biodiesel blenders’ tax credit would restore certainty in the biofuels market, which has entered a production crisis, threatening supplies.

The expiration of the blenders’ tax credit at the end of 2024, coupled with an incomplete and ineffective tax framework created under the new “Section 45Z” clean fuel producers’ tax credit, has decimated biofuels supply chains, the associations noted. Many biofuel production facilities, particularly biodiesel plants, have scaled back or are shutting down entirely.

EPA data shows that total renewable diesel and biodiesel volumes are down by 58.8% since the Biodiesel Tax Credit expired at the end of 2024. Total volumes have declined by 50.2% year over year.

More than 20 U.S. biofuel facilities — representing almost 15% of the biofuels market — will shutter or idle production in 2025, according to public data, reducing biodiesel and renewable diesel capacity by nearly 750 million gallons, per year. Iowa, the leader in biodiesel production, could shutter most of its 10 biodiesel production facilities this year, removing nearly 20% of U.S. biodiesel from the market.

“In absence of an extension of the [blenders’ credit], EPA should remain wary of these major disruptions as it develops the forthcoming renewable volume obligations,” the associations said, adding that they are eager to work with EPA to advance consumer-oriented fuel policies that support the Administration’s agenda and the American consumer.