Biodiesel Production Rebounds as Trucking Industry Seeks Relief from Fuel Costs

Biodiesel production in the U.S. surged to 403 million gallons in April 2026, marking a sharp recovery from just 258 million gallons in January. The rebound follows the federal government’s finalization of Renewable Fuel Standard volume requirements, which has restored confidence in the biofuel sector. Iowa remains the nation’s top biodiesel producer, thanks to robust state incentives, infrastructure investments, and a network of 905 fueling stations offering biodiesel blends. The state has also allocated $65 million in biofuel infrastructure grants to help retailers upgrade equipment for higher biofuel blends.

Last year, Iowa’s biodiesel output plummeted nearly 25% from 2024 levels to 266 million gallons, with production capacity dropping from 11 plants to eight. Low EPA renewable fuel volume obligations and uncertainty over federal tax credits were cited as major obstacles. To meet 2026 and 2027 volume targets, biodiesel and renewable diesel production must increase by over 60% compared to 2025, a challenge Iowa producers are now addressing by operating at full capacity. Industry leaders argue that expanded biodiesel availability will reduce trucking’s exposure to volatile diesel prices, offering a cost-effective alternative.

Biodiesel blends like B20 (20% biodiesel, 80% petroleum diesel) often undercut conventional diesel prices, while regional tax exemptions and wholesale market fluctuations further enhance its appeal. Brad Wilson, president of Western Iowa Energy, described the turnaround as critical after a difficult 2025, when the company was forced to cut its workforce by 25% to survive. Now, with improved margins, Wilson called the rebound a “great turnaround.” The push for biodiesel aligns with broader efforts to diversify fuel supplies, making the trucking industry less vulnerable to geopolitical tensions, weather disruptions, and oil market volatility. Iowa’s dominance in biodiesel production is followed by Missouri, which operates five plants, according to Energy Information Administration data.