Production of biodiesel in Iowa dropped by more than 30 percent last year with only eight facilities reporting production in 2025, according to the Iowa Renewable Fuels Association (IRFA).

Iowa’s biodiesel plants produced 244 million gallons in 2025, down 31% from 353 million gallons in 2024 as the industry faced great uncertainty in 2025 due to both low Renewable Fuel Standard (RFS) blending levels and a lapse in federal tax policy, said Iowa RFA Executive Director Monte Shaw. “Lack of tax policy coupled with low RFS numbers sent producers into a tailspin. We have plants trying to hang on by their fingertips waiting for clarity from DC. Hopefully we can get final guidance on the 45Z tax credits soon and certainty on a robust RFS level for 2026 soon after,” said Shaw.

2025 represented the last of a disappointingly low 3-year RFS blend rule put in place during the Biden Administration. While the Trump Administration has proposed a much more robust RFS rule for 2026-2027, it has not yet been finalized, leaving the industry in limbo. Further, the long-standing biodiesel blenders tax credit was allowed to expire at the end of 2024, to be replaced with a new clean fuel production tax credit, referred to as 45Z. However, the Biden IRS did not finalize the 45Z rules before 2025, again leaving the industry in limbo. While 45Z was modified by Congress in 2025, the Trump IRS has also not yet finalized rules for the tax credit.

“With President Trump being in Iowa tomorrow, we are hopeful that he can go back to D.C. and nudge those agencies to move faster to finalize both the new RFS blend levels and 45Z tax credit guidance,” Shaw added. “If so, 2026 could be a rebound year for biodiesel production. There are biodiesel plants sitting idle in Iowa. We hope they can operate again in a matter of weeks.”