The U.S. biofuel industry stepped into 2026 with strong policy backing and rising demand. However, global events quickly changed the tone. A sharp escalation in the US–Israel–Iran conflict in late February sent shockwaves through energy markets. Oil prices jumped, supply chains tightened, and uncertainty spread across fuel markets.

At the same time, the U.S. Environmental Protection Agency (EPA) introduced its most ambitious biofuel policy yet under the Renewable Fuel Standard (RFS). This created a powerful but complicated mix—long-term policy certainty collided with short-term geopolitical chaos.

As a result, the U.S. biofuel sector now faces a defining moment. Growth looks strong on paper, but rising costs and market volatility are testing how sustainable that growth really is.

EPA Administrator Lee Zeldin said:

“President Trump promised a Golden Age of American agriculture. Once again, his administration is delivering. Overall, ‘Set 2’ creates a larger, more stable, and more reliable domestic market for U.S. crops, strengthening farm income and rural economies. 

For 20 years, this program has diversified our nation’s energy supply and advanced American energy independence. EPA is proud to deliver on this mission and to do so at historic levels.”

EPA’s RFS ‘Set 2’ Rule Changes the Game

Amid this volatility, U.S. policy took a decisive turn. On March 26, 2026, the EPA finalized the Renewable Fuel Standard (RFS) “Set 2” rule, setting new blending targets for 2026 and 2027.

• The new requirements are the highest in the program’s history. The EPA set total renewable volume obligations at 26.81 billion RINs for 2026 and 27.02 billion RINs for 2027.

These targets reflect a major increase compared to previous years and signal a strong push toward domestic biofuel production.

• The policy focuses heavily on expanding the use of biomass-based diesel, including biodiesel and renewable diesel. This includes a 70 percent reallocation of small refinery exemptions granted for 2023–2025
• At the same time, ethanol blending levels remain stable at 15 billion gallons annually, providing consistency for corn producers.

Additionally, the rule puts back 70% of the biofuel volumes that small refineries didn’t have to blend from 2023 to 2025. This effectively increases the burden on refiners while ensuring that biofuel demand remains strong.

Policy Pivot Favors U.S. Biofuel Producers

Beyond volume targets, the EPA introduced structural changes. The agency removed renewable electricity from the RFS program, narrowing its focus to liquid and gaseous fuels. It also introduced measures to limit the role of foreign feedstocks in the future.

Starting in 2028, imported biofuels will receive a lower compliance value compared to domestic products. In addition, incentives such as the 45Z tax credit are designed to favor U.S.-based production.

The broader goal is clear. The policy aims to strengthen energy independence, support farmers, and reduce reliance on foreign oil. Estimates suggest that these measures could cut oil imports by hundreds of thousands of barrels per day over the next two years.

At the same time, the EPA expects significant economic benefits. The rule could generate billions of dollars for rural economies and create thousands of new jobs across agriculture and manufacturing sectors.

The U.S. Energy Information Administration (EIA) recently published updated data on the country’s biofuel production capacity, shown below.

• EARLIER: US Biofuels Get Big Boost: USDA Invests $537M to Power America’s Clean Energy Future 

Demand Surges but Supply Faces Pressure

While policy is driving demand higher, supply conditions remain tight. The U.S. biofuel market is projected to exceed $41 billion in 2026, supported by transportation demand and decarbonization goals.

Ethanol continues to dominate the market, especially through E10 fuel blends. However, advanced biofuels such as renewable diesel and SAF are growing faster due to stronger policy incentives and rising interest in low-carbon fuels.

Despite this growth, feedstock availability is becoming a major concern. Domestic sources such as soybean oil, used cooking oil, and tallow are under pressure. Prices have risen sharply due to limited supply and increased competition from both the fuel and food industries.

At the same time, import restrictions have reduced access to cheaper global feedstocks. Tariffs and lower compliance values for foreign inputs are shifting the market toward domestic sourcing. While this supports local producers, it also reduces flexibility during supply shortages.

New processing capacity is helping to ease some of the pressure. Agribusiness companies are expanding oilseed crushing operations, and renewable diesel plants are increasing output. However, these efforts may take time to fully balance supply and demand.

War-Driven Oil Shock Makes Biofuels More Valuable

The U.S. biofuel market is gaining momentum as rising oil prices and global conflict reshape energy choices. The ongoing U.S.-Israel-Iran war has disrupted key oil infrastructure and shipping lanes near the Strait of Hormuz, sending crude prices sharply higher.

As conventional fuels become more expensive, alternatives like ethanol, renewable diesel, and sustainable aviation fuel (SAF) are increasingly attractive, driving demand across the sector. This surge has pushed feedstock costs to multi-year highs, with soybean oil, used cooking oil, and animal fats climbing steadily.

At the same time, renewable fuel credits, or RINs, have reached levels not seen in years, boosting margins for biofuel producers but raising compliance costs for refiners. Reports from Argus Media show that U.S. renewable diesel feedstocks hit their highest prices in over two years this month, highlighting the market’s sensitivity to war-driven disruptions.

While industry groups argue that strong domestic production stabilizes supply and reduces reliance on imported oil, refiners warn that these rising costs could eventually reach consumers, especially in regions with less competition. The combination of strong demand, tight supply, and geopolitical risk is redefining U.S. biofuel market dynamics.

Opportunities for Farmers, Challenges for Refiners

The current landscape is creating both opportunities and challenges.

Biofuel producers and farmers are seeing strong benefits. Higher demand for crops like corn and soybeans is supporting agricultural incomes. Investment in renewable fuel projects is also increasing, driven by policy certainty and market growth.

However, refiners and fuel distributors are facing tighter margins. The cost of compliance, combined with volatile feedstock prices, is making operations more difficult. Smaller players may struggle to compete in this environment.

Consumers could also feel the impact through higher fuel prices, especially if cost pressures continue. To manage these risks, many companies are turning to hedging strategies. Storage, long-term contracts, and flexible sourcing are becoming essential tools in navigating market uncertainty.

Supporting this announcement, U.S. Secretary of Agriculture Brooke L. Rollins, said:

“Today’s announcement is truly historic for our nation’s farmers and energy producers. These numbers represent the highest levels of biofuels ever required to be blended into our fuel supply. With President Trump and Administrator Zeldin’s leadership, these historically high volumes are expected to create a $3 to $4 billion dollar increase in net farm income. The Renewable Fuel Standard Set 2 Rule will create a $31 billion dollar value for American corn and soybean oil for biofuel production in 2026, which is $2 billion more than in 2025. Our farmers are stepping up to grow American energy dominance.”

Strong Growth, But Uncertain Path

Looking ahead, the U.S. biofuel market is expected to grow steadily, with projections showing annual growth of up to 10% through the next decade. Strong EPA mandates and supportive policies will continue to drive demand.

However, the path forward is far from stable.

The mismatch between long-term policy goals and short-term geopolitical disruptions will remain a key challenge. Events like the ongoing Middle East conflict can quickly shift market dynamics, creating sudden price swings and supply risks.

The rest of 2026 will depend on several key factors, including potential EPA waivers, movements in RIN markets, and developments in global energy supply. In the end, the success of U.S. biofuels will depend on balance. Policy support provides a strong foundation, but flexibility will be critical in managing real-world challenges.

Despite the industry growing fast, the question remains—can it handle the pressure of both policy ambition and global uncertainty at the same time?

• ALSO READ: History Repeating Itself: Why Middle East Conflict at the Pump Should Be a Wake-Up Call for North America

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The U.S. Department of Energy is intensifying efforts to secure critical minerals as global supply risks rise. In a new collaboration, the DOE’s Ames National Laboratory and the Critical Materials Innovation Hub have joined hands with Amazon to recover high-value materials from waste.

The partnership focuses on extracting battery-grade graphite and key minerals from discarded textiles and electronic waste. This move reflects a broader U.S. strategy—reduce import dependence, build domestic capacity, and create a circular supply chain for critical materials.

Assistant Secretary of Energy (EERE) Audrey Robertson, leading DOE’s Office of Critical Materials and Energy Innovation, said:

“At scale, the recovery of critical minerals from end-of-life technologies and textile waste has the potential to transform our domestic critical materials supply chains. This pioneering work, made possible by an exciting new partnership with Amazon, supports the Trump Administration’s efforts to reduce our reliance on foreign imports and strengthen our national security.”

U.S. Aims for Domestic Graphite Supply

The collaboration combines materials science with artificial intelligence. Ames Lab and CMI bring decades of expertise in metals refining and advanced materials. Amazon contributes AI, logistics, and large-scale supply chain capabilities.

Ames Laboratory Director Karl Mueller also noted,

“This is an excellent match for Ames National Laboratory’s deep expertise in materials science. For decades, Ames Lab has led the nation in metals refining, purification, and critical materials research—and applying that strength to real-world challenges.”

Turning Textiles into Battery-Grade Graphite 

A major project aims to convert discarded textiles into battery-grade graphite. This is significant because graphite is essential for lithium-ion batteries used in electric vehicles (EVs) and energy storage systems.

Today, the U.S. remains heavily dependent on imports for graphite. In fact, more than 90% of global battery-grade graphite processing is concentrated in China, creating a major supply risk.

• As of 2024, the U.S. imported about 60,000 metric tons of natural graphite, down from roughly 84,000 tons in 2023.
• China remained the largest supplier, accounting for around 67.6% of all natural graphite imports by value.

This is worth roughly $375 million. It represents a slight decrease in volume but still a dominant share of the market.

By extracting graphite from waste, the U.S. can reduce both landfill pressure and foreign dependence. This approach aligns with the DOE’s push to secure materials from “secondary sources” such as waste streams.

• READ MORE: US–China Trade Tensions Heat Up Over Graphite and EV Battery Supply Chains

AWS Powers AI-Driven Mineral Recovery

A second initiative focuses on recovering minerals like gallium from end-of-life IT hardware. Gallium is a critical input for semiconductors, power electronics, and defense technologies.

The importance of this effort is clear. In recent years, China has restricted exports of gallium and germanium, disrupting global supply. These restrictions effectively removed up to 90% of global gallium supply from international markets, exposing major vulnerabilities.

Here, Amazon Web Services will deploy AI tools to map supply chains, identify recovery opportunities, and assess economic feasibility. At the same time, CMI researchers will develop efficient extraction and refining methods.

This fusion of AI and materials science could transform recycling. Instead of being discarded, old electronics could become a reliable domestic source of critical minerals.

A Fragile Supply Chain: Why the U.S. Is Acting Now

Critical minerals are the core of modern industries—from EVs and renewable energy to semiconductors and defense systems. However, U.S. supply chains remain highly vulnerable.

According to recent industry analysis:

• The U.S. is 100% import-reliant for at least 13 critical minerals
• Over 20 additional minerals have an import dependence above 50%
• The country exports much of its raw materials for processing overseas due to limited domestic capacity

China dominates refining and processing, backed by decades of industrial policy. This concentration creates risks of supply disruptions, price spikes, and geopolitical leverage.

To address this, the U.S. government is mobilizing large-scale investments. In 2025, the DOE announced nearly $1 billion in funding to strengthen domestic critical mineral supply chains, with a strong focus on battery materials processing and recycling.

Additionally, new initiatives such as strategic stockpiles and international partnerships are being developed to secure long-term supply.

CMI Hub Leads the Shift to Circular Supply Chains

The Amazon–DOE partnership reflects a major shift in strategy. Traditionally, supply security depended on mining new resources. Now, recycling and “urban mining” are becoming equally important.

The CMI Hub is leading this transition through research in:

• Expanding material supply sources
• Developing substitutes for scarce minerals
• Recovering materials from waste
• Accelerating the commercialization of new technologies

Recycling offers several advantages. It is faster to deploy than mining, less environmentally damaging, and often more cost-effective in the long run. For example, the U.S. has already committed funding to advanced graphite recycling projects to build domestic battery supply chains.

CMI Hub Director Tom Lograsso

“This collaboration is a natural extension of the expertise that CMI Hub was created to deliver. CMI’s mission is to move breakthrough materials technologies from the laboratory into real-world applications on timelines that meet industry’s needs. Working with Amazon gives us the opportunity to apply our capabilities at scale—combining CMI’s materials science expertise with Amazon’s AI to turn innovations into practical solutions that strengthen the nation’s critical materials supply chains.” 

Public–Private Partnerships Drive Scale

This collaboration also highlights a broader trend—closer ties between government research institutions and private companies.

Amazon brings AI, data analytics, and global logistics. Ames Lab and CMI contribute scientific expertise and research infrastructure. Together, they aim to move solutions from the lab to real-world deployment at scale.

Such partnerships are critical because the challenge is not just technical. It also involves economics, infrastructure, and supply chain coordination. By combining strengths, these collaborations can accelerate innovation and reduce risks.

Conclusion: A Strategic Shift With Global Impact

The U.S. is clearly redefining its critical minerals strategy. Instead of relying only on mining, it is tapping into waste as a new resource base.

This approach offers strong advantages:

• Waste streams are abundant and underutilized
• Recycling reduces environmental impact
• Domestic recovery improves supply security

However, challenges remain. Domestic processing capacity is still limited, and scaling recycling technologies will require sustained investment and policy support.

At the same time, AI is emerging as a key enabler. It can optimize recovery processes, improve efficiency, and reduce costs. As adoption grows, it could become a critical tool in securing mineral supply chains.

And the partnership between the DOE, Ames Lab, CMI, and Amazon marks a turning point in how the U.S. approaches critical minerals.

• READ MORE: DOE Launches $500M Funding Drive to Strengthen U.S. Battery Supply Chains and Critical Minerals Processing 
• LATEST: AI Solutions from Microsoft and NVIDIA Power DOE’s Nuclear Energy Genesis Mission • Carbon Credits

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Google is stepping up its climate strategy with a deeper commitment to sustainable aviation fuel (SAF). In a new long-term agreement with American Express Global Business Travel and Shell Aviation, the tech giant will source SAF environmental attribute data through the Avelia registry.

This move highlights a bigger trend. Corporations are no longer just offsetting emissions—they are actively shaping clean fuel markets. For Google, SAF is becoming a critical tool to cut emissions from business travel, one of the hardest sectors to decarbonize.

Vrushali Gaud, Global Director of Climate Operations, Google, said:

“Sustainable aviation fuel represents a critical unlock for decarbonizing the hard-to-abate aviation sector and we recognize the importance of long-term agreements to increase demand and expand its availability. We view this as a key opportunity to support the broader ecosystem through this book and claim effort, while making progress towards reducing our own aviation emissions.”

How “Book and Claim” Is Changing the Future of Aviation Fuel

SAF offers a clear advantage. It can reduce lifecycle greenhouse gas emissions by up to 80% compared to traditional jet fuel. That makes it one of the most promising solutions for aviation, a sector with limited low-carbon alternatives.

Google’s participation in the Avelia platform shows how corporate demand can drive supply. Avelia uses a “book and claim” system, allowing companies to claim emissions reductions even if SAF is not physically used on their specific flight. Instead, SAF is added elsewhere in the fuel network, and the environmental benefits are tracked digitally using blockchain.

This system solves a major problem—limited fuel availability. SAF supply is still concentrated in a few locations, while demand is global. By separating physical fuel use from emissions accounting, Avelia expands access and encourages broader adoption.

The platform has already made measurable progress:

• Over 64 million gallons of SAF have been supplied globally
• More than 590,000 tonnes of CO₂ emissions avoided
• Participation from 66 companies and airlines

These numbers signal growing momentum. More importantly, they show how digital infrastructure can accelerate climate solutions in traditional industries.

• ALSO READ: DHL Signs Major SAF Deal with Neste Ahead of New EU Rules 

Beyond Flights: Google’s Broader Transport Strategy to Achieve Carbon-Neutral by 2030

Google’s SAF investment is only one part of a larger plan to cut transport emissions. The company is actively reducing the carbon footprint of both employee commuting and logistics.

Low-Carbon Commutes with EVs 

It promotes low-carbon commuting by offering shuttle services, encouraging carpooling, and supporting public transit, cycling, and walking. At its campuses, Google is also investing heavily in electric mobility. By 2024, it had installed over 6,000 EV charging ports across the U.S. and Canada. In India, electric vehicles already make up nearly a quarter of its internal commuter fleet.

At the same time, Google is investing directly in SAF production. In 2024, it joined the United Airlines Ventures Sustainable Flight Fund, a $200+ million initiative supporting next-generation fuel technologies. The fund backs companies like Viridos and Svante, which are working on advanced fuel and carbon capture solutions.

Google is also a member of the Sustainable Aviation Buyers Alliance, further strengthening its role in shaping demand for cleaner aviation fuels.

The Reality Check: SAF Growth Faces Real Barriers

Despite strong corporate interest, SAF still faces significant challenges. Global production is rising fast, but not fast enough.

Production increased 24 times since 2021 and is expected to reach around 713 million gallons by the end of 2025. However, this still represents less than 1% of total jet fuel demand.

Even more concerning, growth may slow in 2026. According to the International Air Transport Association (IATA), production is expected to rise only modestly, reaching about 2.4 million metric tons. At the same time, costs remain high—SAF can be two to five times more expensive than conventional fuel.

This price gap creates a major burden for airlines. In 2025 alone, SAF-related costs could reach $3.6 billion globally. Without stronger policy support, scaling production will remain difficult.

Policy and Market Shifts: A Fragmented Landscape

Policy support plays a crucial role in SAF growth, but global approaches remain uneven.

In the U.S., incentives are weakening. The Clean Fuel Production Tax Credit (45Z) will drop significantly in 2026, reducing financial support for SAF producers. This could slow investment and limit supply growth.

In contrast, Europe is pushing ahead. The ReFuelEU Aviation mandate requires a 2% SAF blend, while countries in Asia, including Singapore and Thailand, are introducing their own mandates starting in 2026.

This divergence creates uncertainty. Companies and producers must navigate different regulations across regions, making long-term planning more complex.

The Feedstock Challenge: The Biggest Bottleneck

Analysts say technology is not the main constraint for SAF—feedstock is.

SAF relies on low-carbon raw materials such as waste oils, agricultural residues, and synthetic fuels. These resources are limited and already in demand from other sectors like renewable diesel and bioenergy.

As competition intensifies, sustainability standards are also becoming stricter. Producers must prove that their feedstocks are traceable and truly low-carbon. This means rapid expansion is unlikely in the short term. Instead, companies are expected to focus on gradual capacity growth and flexible production strategies.

Considering all the above factors, 2026 will not deliver a breakthrough but it will test the foundation of the SAF market. Three factors will define progress:

• Policy credibility: Governments must provide stable, long-term incentives
• Feedstock strategy: Companies need reliable and sustainable supply chains
• Procurement innovation: Airlines and corporations must adopt smarter purchasing models

Momentum is building, but it remains selective. Only companies that align these elements will succeed as the market evolves.

Looking Ahead: Strong Demand Signals for 2030 and Beyond

Despite the challenges, SkyNRG’s SAF Market Outlook gives optimistic long-term projections. It highlights that the demand could reach 15.5 million metric tons by 2030 under current trends.

By 2050, SAF could supply up to 16% of global aviation fuel demand. It is equivalent to roughly 72 million tonnes (24 billion gallons)—even without the introduction of new policy measures.

These numbers highlight one key point: demand is not the problem. The challenge lies in scaling supply efficiently and affordably. Nonetheless, sustainable aviation fuel holds real promise. It offers one of the few viable paths to reduce emissions in aviation without redesigning aircraft.

Google’s latest move shows how large corporations can accelerate this transition. But the road ahead remains complex. High costs, limited supply, and policy uncertainty continue to slow progress.

The bottom line is clear: SAF is not scaling overnight. But with the right mix of corporate demand, policy support, and innovation, it could become a cornerstone of clean aviation in the decades ahead.

• ALSO READ: Greening the Aviation: Lufthansa and Airbus Team Up to Cut Business Travel Emissions Using SAF

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