Key highlights
- 1The North America renewable diesel market is expected to reach USD 30.5 billion by 2036, at a CAGR of 8.0% from 2026 to 2036, driven by low-carbon fuel policy and heavy-transport decarbonisation, with the near term shaped by policy and margins.
- 2North America leads global demand. North America holds about 46.5% of the global renewable diesel market, the largest regional share, on strong policy support and a large production base.
- 3Production is scaling. U.S. renewable diesel production capacity was about 5.1 billion gallons in 2025, and the EIA forecasts U.S. production to average about 230,000 barrels per day in 2026 and rise to about 280,000 barrels per day in 2027, partly on certainty around the 45Z credit.
- 4Policy is the central driver. Renewable diesel value depends on the Renewable Fuel Standard and its RIN credits, the California LCFS, and the Section 45Z Clean Fuel Production Credit, which replaced the blender's credit in 2025 and is based on carbon intensity.
- 5Waste feedstocks carry an advantage. Used cooking oil, animal fats, and distillers corn oil confer lower carbon intensity under LCFS and RFS frameworks, and the largest producer, Diamond Green Diesel, processes primarily recycled fats, used cooking oil, and inedible corn oil.
- 645Z guidance and a SAF shift are reshaping the market in 2026. In February 2026, the Treasury and IRS published proposed 45Z regulations, and producers are increasingly upgrading renewable diesel capacity to sustainable aviation fuel.
- 7Key companies include Valero Energy Corporation, Darling Ingredients Inc., Neste Corporation, Marathon Petroleum Corporation, and Phillips 66 Company.
Report Overview
The North America renewable diesel market covers renewable diesel produced by hydrotreating fats, oils, and greases into a drop-in fuel chemically similar to petroleum diesel, usable in existing diesel engines and infrastructure. It is distinct from biodiesel, which is a fatty-acid methyl ester with blending limits. The market spans feedstocks including soybean and other vegetable oils, used cooking oil, animal fats and tallow, and distillers corn oil, and end uses including on-road and off-road transportation, rail, marine, and power generation. Demand is concentrated in the United States, particularly the West Coast, where producers capture both federal RIN credits and state LCFS credits, and the market is shaped by federal and state low-carbon fuel policy and the 45Z tax credit. This report examines the size, drivers, segmentation, countries, pricing, competition, recent developments, and outlook of the market, and provides recommendations for participants. Sizing is built bottom-up from production capacity, output, and product value.
Market dynamics
Drivers
- 01Policy is the central driver: the federal Renewable Fuel Standard which generates RIN credits, and the California Low Carbon Fuel Standard, which generates state credits, together create the economics of renewable diesel, and most U.S. renewable diesel has historically been consumed on the West Coast where producers capture both.
- 02The Section 45Z Clean Fuel Production Credit which replaced the blender's credit in 2025 and is based on carbon intensity, is now a key support, and certainty around it is a reason the EIA forecasts U.S. production to rise from about 230,000 barrels per day in 2026 to about 280,000 barrels per day in 2027.
- 03Decarbonisation of heavy transport where renewable diesel offers a drop-in, lower-carbon fuel for trucking, rail, and off-road use without engine changes, adds demand.
Opportunities
- 01Waste-feedstock renewable diesel is a strong opportunity because used cooking oil, animal fats, and distillers corn oil carry lower carbon intensity that earns more valuable LCFS and RFS credits and a larger 45Z credit than crop oils, and the largest producers are built around waste feedstocks.
- 02Heavy-transport decarbonisation is a durable opportunity since renewable diesel is one of the few drop-in options for trucking, rail, marine, and off-road use that require liquid fuels.
- 03Co-production of sustainable aviation fuel is a growing opportunity as producers upgrade renewable diesel capacity to SAF to capture aviation demand and higher credit value, illustrated by capacity upgrades at Diamond Green Diesel and Montana Renewables.
Trends
- 01The market passed through a margin trough in 2024 and 2025 as capacity outran mandates and LCFS and RIN credit values fell, which idled higher-cost biodiesel plants and slowed several announced projects, while large integrated producers kept running.
- 02Producers are shifting toward lower-carbon waste feedstocks and toward sustainable aviation fuel, upgrading renewable diesel capacity to SAF to capture higher-value demand.
- 03The transition from the blender's credit to the carbon-intensity-based 45Z credit is reshaping economics, with lower credit values for crop-oil feedstocks such as soybean oil, and proposed 45Z regulations issued in February 2026 provided clarity.
- 04Demand remains concentrated where policy supports it principally California and the West Coast.
Report Summary
| Base Year | 2025 |
|---|---|
| Forecast Period | 2026-2036 |
| Market Size (2025) | USD 13.0 billion |
| Market Size (2026) | USD 14.1 billion |
| Market Size (2036) | USD 30.5 billion |
| CAGR (Value) | 8.0% (2026-2036) |
| Format | PDF & Excel |
| Segments Covered | By Feedstock: Soybean & Vegetable Oils, Used Cooking Oil, Animal Fats & Tallow, Distillers Corn Oil, Other Waste Oils. By Technology: Hydrotreating, Co-processing, Others. By Application; By Country. |
| Geographies Covered | United States, Canada, and Mexico |
| Key Companies | Valero Energy Corporation, Darling Ingredients Inc., Neste Corporation, Marathon Petroleum Corporation, Phillips 66 Company, Chevron Corporation, HF Sinclair Corporation, CVR Energy, Inc., PBF Energy Inc., Calumet, Inc., Global Clean Energy Holdings, Inc., World Energy, LLC |
Segmental analysis
By Feedstock
- Soybean and vegetable oils hold the largest share at about 40% of the market in 2026, with the remaining share divided across used cooking oil, animal fats and tallow, distillers corn oil, and other waste oils.
- Soybean and vegetable oils are the largest feedstock by volume because of their scale and availability, though the 45Z credit is smaller for crop oils than for waste feedstocks.
- Used cooking oil animal fats and tallow, and distillers corn oil are waste and by-product feedstocks that carry lower carbon intensity, earning more valuable LCFS and RFS credits and a larger 45Z credit, and they anchor the supply chains of the largest producers.
Competition for waste feedstocks, and the carbon-intensity advantage they confer, is a defining feature of the market.
By Technology
- Hydrotreating holds the largest share at about 90% of the market in 2026, with the remaining share divided between co-processing and other technologies.
- Hydrotreating which reacts fats and oils with hydrogen to produce a hydrocarbon fuel chemically similar to petroleum diesel, is the dominant and standard technology, used in dedicated renewable diesel plants and converted refineries.
- Co-processing in which renewable feedstocks are processed alongside petroleum in existing refineries, is a smaller route used by some refiners.
- Other technologies including gasification and Fischer-Tropsch routes, are limited.
The dominance of hydrotreating reflects its maturity and its production of a true drop-in fuel.
By Application
- Transportation holds the largest share at about 85% of the market in 2026, with the remaining share divided across rail, marine, power generation, and other uses.
- Transportation principally on-road heavy-duty trucking and off-road use, is the core application because renewable diesel is a drop-in fuel for diesel engines and fleets seeking lower carbon without engine changes, and it is concentrated where policy rewards it, such as California.
- Rail and marine use renewable diesel to reduce emissions in hard-to-electrify segments.
- Power generation and other uses including backup and off-grid power, are smaller applications.
The concentration in transportation reflects the role of renewable diesel as a drop-in decarbonisation option for diesel fleets.
Geographic analysis
United States Renewable Diesel Market
The United States is by far the largest market in the region accounting for the large majority of demand and production and underpinning North America's roughly 46.5% share of the global market. Demand is concentrated on the West Coast, particularly California, where producers capture both federal RIN credits under the Renewable Fuel Standard and state credits under the LCFS, and U.S. renewable diesel capacity was about 5.1 billion gallons in 2025. Supply is led by Diamond Green Diesel, the joint venture of Valero Energy Corporation and Darling Ingredients Inc. and the second-largest producer in the world at about 1.2 billion gallons per year, together with Marathon Petroleum Corporation, Phillips 66 Company, Chevron Corporation, and others. The transition to the 45Z credit, the 2024 and 2025 margin trough, and the shift toward SAF are shaping the market, and the United States sets the pace for policy, production, and technology.
Canada Renewable Diesel Market
Canada is a significant and growing market driven by the federal Clean Fuel Regulations, which require reductions in the carbon intensity of transport fuels, and by provincial low-carbon fuel policy in British Columbia and elsewhere. Demand is met by domestic production and imports, and the Canadian government has introduced a biofuel production incentive and amended the Clean Fuel Regulations to support domestic producers and canola growers. British Columbia, with its own low-carbon fuel standard, is a strong demand centre. The country's policy framework and agricultural feedstock base support growth, and Canadian demand is closely linked to the North American supply chain.
Pricing Analysis
Pricing in renewable diesel is determined less by production cost than by policy, because the economics depend on the stacking of federal and state credits on top of the fuel price. Renewable diesel typically costs more to produce than petroleum diesel, and its competitiveness rests on RIN credits under the Renewable Fuel Standard, LCFS credits in California and other states, and the 45Z Clean Fuel Production Credit, which together can exceed the production-cost gap. The value of these credits varies, and the 2024 and 2025 decline in LCFS and RIN credit prices compressed margins across the industry, idling higher-cost plants and slowing projects. Several factors set the effective economics. Policy credit values are central, since RIN, LCFS, and 45Z credits determine profitability, and their variability is the main source of margin risk. Carbon intensity drives credit value, so waste feedstocks such as used cooking oil, tallow, and distillers corn oil, which carry lower carbon intensity, earn more than crop oils; the 45Z credit is worth far more for low-carbon-intensity fuel, up to USD 1.00 per gallon with wage and apprenticeship requirements, than the roughly USD 0.15 per gallon estimated for soybean-oil renewable diesel. Feedstock cost and availability are a major factor, with competition for limited waste feedstocks a persistent pressure. Location matters, since West Coast producers capture state credits unavailable elsewhere.
The trajectory of the market depends heavily on the stability and level of policy support, which is the defining variable for pricing and investment.
Competitive landscape
The competitive field is led by large integrated energy and refining companies and specialist producers. Diamond Green Diesel, the joint venture of Valero Energy Corporation and Darling Ingredients Inc., is the largest North American and second-largest global producer, built around waste feedstocks that confer a carbon-intensity advantage. Neste Corporation is a leading global renewable diesel producer supplying the North American market. Marathon Petroleum Corporation and Phillips 66 Company have converted refineries to renewable diesel, and Chevron Corporation entered the market through its acquisition of Renewable Energy Group. HF Sinclair Corporation, CVR Energy, Inc., and PBF Energy Inc. produce renewable diesel from converted or dedicated facilities.
Among specialists, Calumet, Inc., through Montana Renewables, produces renewable diesel and is expanding toward sustainable aviation fuel; Global Clean Energy Holdings, Inc., through Bakersfield Renewable Fuels, and World Energy, LLC operate dedicated facilities. Competition turns on feedstock cost and carbon intensity, access to LCFS markets, scale and integration, and the ability to co-produce SAF, and the 2024 and 2025 margin trough favoured large, integrated, low-carbon-intensity producers while pressuring higher-cost operators. As the 45Z credit and the SAF shift reshape economics, producers with waste-feedstock supply, scale, and SAF optionality are best positioned, while the market rationalises after its rapid build-out.
Voice of Customer
Renewable diesel lets us cut fleet emissions today without changing trucks or fuelling infrastructure, which is why we switched in California. The economics work because of the state and federal credits, so our exposure is really to policy. We watch the LCFS and the 45Z rules as closely as the fuel price.
Fleet sustainability manager, logistics company (United States, California):
The whole industry is chasing low-carbon-intensity feedstocks, because waste oils and fats earn far more in credits than soybean oil, especially under 45Z. That competition has tightened the feedstock market and separated the producers with secure waste supply from the rest. Feedstock, not the fuel, is where the margin is won or lost.
Feedstock trader, renewable fuels (United States):
The build-out got ahead of the mandates, and 2024 and 2025 were a reset. We kept our integrated, low-carbon-intensity plants running and slowed the marginal projects. The move now is toward SAF, where the demand and the credit value are growing, so renewable diesel capacity with SAF optionality is the asset to have.
Refining executive (United States):
Analyst perspective
North American renewable diesel is a large, policy-driven market that has passed through a rapid build-out and a margin reset and is now maturing. The region leads the world with about 46.5% of demand, production capacity reached about 5.1 billion gallons in 2025, and the EIA expects output to keep rising through 2027 on 45Z certainty. The fundamental appeal is real: renewable diesel is a drop-in, lower-carbon fuel for the hard-to-electrify diesel segment, and demand is anchored by enforceable federal and state low-carbon fuel policy.
The defining feature of the market, and the honest caution, is that its economics are made by policy rather than by the fuel itself. Profitability depends on the stacking of RIN, LCFS, and 45Z credits, and the decline in LCFS and RIN credit values in 2024 and 2025 compressed margins, idled higher-cost plants, and slowed projects, showing how exposed the market is to policy and credit prices. The transition from the blender's credit to the carbon-intensity-based 45Z credit has reduced support for crop-oil feedstocks such as soybean oil while rewarding waste feedstocks, intensifying competition for limited used cooking oil, tallow, and distillers corn oil. A parallel shift toward sustainable aviation fuel is diverting some renewable diesel capacity toward aviation, where demand and credit value are growing. The market should be assessed on policy stability, feedstock carbon intensity and security, scale, and SAF optionality rather than on headline capacity, and producers with low-carbon-intensity feedstocks, integration, and SAF flexibility are best positioned.
Key Strategic Developments
- February 2026: The U.S. Treasury and IRS published proposed regulations for the Section 45Z Clean Fuel Production Credit, providing clarity for renewable diesel producers on a carbon-intensity-based credit worth up to USD 1.00 per gallon for low-carbon fuel with wage and apprenticeship requirements, and less for higher-carbon feedstocks such as soybean oil.
- 2026: The EIA forecast U.S. renewable diesel production to average about 230,000 barrels per day in 2026 and rise to about 280,000 barrels per day in 2027, partly on certainty around the 45Z credit, indicating continued output growth despite the margin reset.
- 2026: Producers continued to shift renewable diesel capacity toward sustainable aviation fuel, with Diamond Green Diesel holding optionality to upgrade about half of its Port Arthur renewable diesel capacity to SAF and Montana Renewables expanding toward a majority-SAF output, reflecting the diversion of capacity toward aviation.
- 2024-2026: A margin trough, as capacity outran mandates and LCFS and RIN credit values fell, idled higher-cost biodiesel plants and slowed several projects, while large integrated producers including Diamond Green Diesel, Marathon, Phillips 66, and Chevron kept running.
- 2025-2026: Canada introduced a biofuel production incentive and amended its Clean Fuel Regulations to support domestic producers and canola growers, reinforcing demand in the North American market.
Strategic Recommendations
For producers
The priority is to secure low-carbon-intensity feedstock and build SAF optionality, because the transition to the 45Z credit rewards low carbon intensity and the shift toward sustainable aviation fuel is where demand and credit value are growing. Companies should prioritise waste and by-product feedstocks such as used cooking oil, tallow, and distillers corn oil, secure feedstock supply against intensifying competition, and design or convert plants with the flexibility to produce SAF alongside renewable diesel. Integration and scale, which allowed the largest producers to keep running through the margin trough, remain important, and access to LCFS markets such as California is central to the economics.
For fleets and fuel buyers
The recommendation is to use renewable diesel where policy supports it, recognising that it offers immediate, drop-in emissions reductions for diesel operations, while managing exposure to policy and credit-price variability. For policymakers, the evidence shows that stable, predictable low-carbon fuel policy is essential, since the margin volatility of 2024 and 2025 flowed directly from credit-price swings, and clarity on the 45Z credit and LCFS programs would support continued investment. For investors, this is a market to evaluate on policy stability, feedstock carbon intensity and security, scale, and SAF flexibility rather than on headline capacity, recognising that durable demand for a drop-in low-carbon fuel is tempered by the policy dependence and feedstock competition that define its economics.
Sustainability impact
Lifecycle Greenhouse Gas Reduction
Renewable diesel reduces lifecycle greenhouse gas emissions compared with petroleum diesel, with the reduction depending on feedstock carbon intensity. Renewable diesel supports emission reduction.
By producing a drop-in diesel from fats, oils, and greases, renewable diesel can substantially cut lifecycle emissions relative to petroleum diesel, with waste feedstocks such as used cooking oil and tallow delivering the largest reductions and the lowest carbon intensity under LCFS and 45Z.
Drop-In Compatibility and Existing Infrastructure
Renewable diesel is chemically similar to petroleum diesel and can be used in existing engines and infrastructure without blending limits, enabling immediate decarbonisation. Renewable diesel supports drop-in decarbonisation.
By working as a direct replacement in diesel engines, fuelling infrastructure, and fleets, renewable diesel enables immediate emissions reductions in hard-to-electrify transport without new engines or equipment, a practical advantage over alternatives that require infrastructure change.
Waste Feedstock Utilisation
Renewable diesel makes productive use of waste and by-product feedstocks such as used cooking oil, animal fats, and distillers corn oil. Renewable diesel supports waste utilisation.
By converting waste oils and fats into transport fuel, renewable diesel adds value to materials that would otherwise be low-value or disposed of, and these waste feedstocks carry the lowest carbon intensity, aligning environmental and economic benefits.
Feedstock and Land-Use Considerations
The use of crop oils such as soybean oil raises feedstock and land-use questions that must be weighed alongside the emissions benefits of renewable diesel. Feedstock sourcing requires careful consideration.
By relying in part on crop oils, renewable diesel raises questions of land use, food-versus-fuel competition, and indirect emissions that policymakers and producers must weigh, which is part of why policy and the 45Z credit increasingly reward lower-carbon-intensity waste feedstocks over crop oils.
Table of contents
14 chapters · 137 pages · click to expandFrequently asked questions
The North America renewable diesel market was valued at USD 13.0 billion in 2025 and is projected to reach USD 30.5 billion by 2036, growing from USD 14.1 billion in 2026, at a CAGR of 8.0% from 2026 to 2036, driven by low-carbon fuel policy and heavy-transport decarbonisation, with the near term shaped by policy and margins.