Here’s Why Biodiesel Isn’t Going To Stop The Rapid Climb Of The Price Of Diesel

Even if you don’t drive a car or truck that drinks diesel, I’m sure you’re aware at just how absurdly high diesel prices have gotten. Average diesel price per gallon is now close to seven bucks, and it’s never really been anywhere close to that. Because diesel is really the fuel that drives so much of our economy – farms use it extensively for machinery, trains use it, trucking relies on it, and so on – the cascading effects of these high fuel prices are being felt everywhere. This isn’t good, and so far there doesn’t even seem to be a solution on the horizon. It’s really pretty bleak.

All of this fretting over diesel has made me wonder about something: where’s all the biodiesel?

I remember back in the early-to-mid-2000s when it was actively hard to find a Mercedes-Benz diesel wagon for sale because everyone was buying them up to convert to be able to run on used French fry oil. Companies were popping up all over the place to do these conversions – there was even one near where I used to live in Los Angeles that was sort of famous, called LoveCraft Biofuels. These places worked out deals with local restaurants to convert their used cooking oil into usable diesel fuel, provided your car had a few relatively minor modifications to heat the fuel to keep it liquid and some filtration systems.

Look, here’s an old commercial for them, featuring a guy with a name that at first auditory-glance sounds like mine, but he’s a lot better-looking:

Places like these were just small-scale, though. They were converting Benz diesels for hipsters one by one, this wasn’t biofuel on an industrial scale. But that was promised, too! There were plans for plants that turned turkey offal and other slaughterhouse wastes into diesel, or crushing soybeans into oils that can become diesel, and more, and for a while it seemed like we’d soon be able to make as much diesel as we needed from renewable biological sources that would be just turned into waste, anyway.

At some point, though, these biofuel enterprises seemed to recede from the spotlight. Lovecraft closed in 2009, and a lot of other small biofuel companies did as well, and I just generally stopped hearing as much about these sorts of enterprises. So, what happened? Why did all these biodiesel initiatives not seem to pan out, and why hasn’t the biodiesel industry stepped up in this time of diesel crisis to help free us from the tyranny of traditional diesel supply issues?

It turns out that there are a lot of reasons. There’s a number of articles online that explain a number of reasons why, but I wanted to hear from an expert, so I reached out to a few. One of the people who responded to me in detail was Monte Shaw, the executive director of the Iowa Renewable Fuels Association. Shaw’s response is quite comprehensive and makes clear that it’s not really one specific reason, but rather a disappointing cocktail of technical, economic, and regulatory reasons:

Biomass-based diesel, which includes both renewable diesel and biodiesel, is stepping up to help in 2026. However, there are practical limitations. Just as traditional refiners can only run their plants at full capacity, the same is true for biodiesel. Each month in 2026 is setting new production records for biodiesel as plants have ramped up and are running flat out today.

You mentioned California. Because of state policies there, I believe over 75% of “diesel” used in the state is actually a combination of renewable diesel and biodiesel. That is a remarkable achievement and should have insulated the state a bit from the current global spike.

But elsewhere inconsistent policy has held back biodiesel. The federal government let the blenders tax credit lapse at the end of 2024 without a replacement for over a year. At the same time the EPA set lackluster Renewable Fuel Standard (RFS) blending levels for 2023-2025. These policy signals curtailed the growth of biodiesel production capacity with many projects being cancelled.

This includes soybean crush facilities that extract the soybean oil that had been planned. We need to grow feedstock availability to grow production. With better tax and RFS policy in place for 2026, we’re starting to see projects move forward again, but they take time to build and start impacting the market.

So with over 5 billion gallons of production capacity, renewable diesel and biodiesel are making a significant contribution to diesel supplies in the US, especially in California. And we’re excited to see growth back on track. But just like petroleum refineries, we don’t have a magic switch to flip to double or triple production overnight.

All diesel engines can use B20 (20% biodiesel). All can use 100% renewable diesel. So there is no equipment limit. It’s a matter of ensuring a stable investment market to spur growth. Biodiesel can and will do more in the future if given a chance.

So, there already is biodiesel being made and used, and that’s great, because it is renewable and helps the US maintain some degree of energy independence, but there are inherent issues with it, even if there were no regulatory hurdles. The feedstock for biofuels is simply more expensive than petroleum, and those same feedstocks – corn, soybeans, vegetable oils – are also human food sources, so there’s a limit on how much can be earmarked for fuel use.

Some sources of biodiesel, like soybeans, seem to be significantly more expensive. There are also issues with transporting biofuel diesel, because biofuels tend to be more corrosive to metals, which means they’re not suitable for pipeline transport, and must be shipped by truck or rail, which is significantly more expensive.

I also reached out to Marc Dreyfors, the manager of Orange County Eco-Innovations Park, which includes Carolina Biofuels, which operates a small fleet of biodiesel-fueled buses for Duke University. Dreyfors noted the regulatory and economic hurdles, especially:

So a new product that’s on the market called renewable diesel. Yeah. It is the same feedstock that biodiesel does, and it produces a more compatible fuel with less side effects issues with it running in modern diesels.

So this, you know, there’s a giant sucking sound at this point of renewable diesel to the feedstock that was wants biodiesel. And then there’s also the loss of the producer’s credit. There was a production credit, blender’s credit. There’s still a production credit, but there’s a blender credit for a dollar for every part, you know, part per million of biodiesel that will blend it into diesel, you got a dollar back from the government. Right. So now it’s just a flat producer’s credit, which tends to benefit the larger producers, whereas the blender’s credit was kind of more egalitarian, and that anybody who blended diesel in with biodiesel could claim the credit.

It’s the influence of the large fossil fuel companies. You’ve got the soybean producer association who wants to sell their soybeans and get produced into biofuel when soybean prices are low, you know, or have some kind of subsidy associated with it.

…

If it’s made at an industrial scale, anything, it’s even harder. We’re unique in that we only make our fuel from recycled food waste, but there’s simply not enough of it to really make a dent, and we have a case for simply using that biodiesel in school buses, because that’s the biggest bang for the buck because it’s reducing air toxic exposure and the engines are old.

The current administration hasn’t been prioritizing biodiesel in any capacity, really, domestically produced or otherwise. Imported biodiesel fell dramatically since 2025 due to the loss of tax credits for such fuels, for example.

What all of this adds up to is really a sort of perfect shitstorm for biofuels. While it all seemed so promising – fuel from French fry oils and other wastes! – the reality of scaling it up just hasn’t proven to be economically viable, at least not yet. And without good incentives or support for companies that wish to try to make these sorts of fuels at scale, it’s all a non-starter.

Now, if the current diesel situation continues, this could change: diesel fuels can be made from these waste products, after all, and if diesel continues to rise in cost, it may end up becoming an economically viable proposition. There are also processes that can turn non-food sources like wood waste into biofuel, and there’s currently promising-looking research into these processes, but a large-scale, economically viable enterprise for this has yet to emerge. But it could!

Is it going to help us right now? No. Is the idea of taking wood waste and turkey guts and turning it into usable diesel still a compelling idea? Absolutely. Unfortunately, it doesn’t seem like we’re there yet, and we don’t have people in power, politically or economically, vested in making sure biodiesel actually happens at larger scales.

Who knows what the future may hold, but for right now, biodiesel isn’t going to be our magic oily bullet.

Top graphic image: DepositPhotos.com