Ongoing tariff and geopolitical uncertainty continue to challenge U.S. soybean farmers, emphasizing the importance of a strong domestic biofuels market to provide stability and long-term demand. At the American Soybean Association (ASA), we are advocating for exactly that — policies to strengthen domestic soy demand and provide farmers with greater certainty in an increasingly volatile environment.

We have been focused on two policy issues to address these concerns: the Section 45Z Clean Fuel Production Credit and the Renewable Fuel Standard (RFS) renewable volume obligations (RVOs). Clear guidance aligning with recently enacted amendments to the 45Z tax credit will help determine the economics of producing low-carbon fuels, while RVOs for 2026 and 2027 will establish the level of biofuel blending required under the RFS. Together, these policies directly shape demand for soybean oil and influence investment decisions across the biofuels value chain.

“As the EPA turns to future RFS volume requirements, these improvements to the 45Z credit provide an important foundation for continued growth in domestic biofuels production.”

To strengthen the foundation of the 45Z credit, ASA led advocacy efforts as Congress developed the tax code changes in the One Big Beautiful Bill Act (OBBBA). These efforts resulted in the removal of the indirect land use change (ILUC) penalty on agricultural biofuels feedstocks and addressed the surge of imported feedstocks entering the biofuels production value chain through new limitations on tax-credit eligibility. As a result, the 45Z credit is now better aligned to prioritize biofuels feedstocks produced in North America.

Through months of education on the impacts of agricultural ILUC penalties, ASA helped secure a doubling of the 45Z credit rate for soy-based biofuels. The removal of the ILUC penalty means the carbon intensity of soy is now based on its direct impacts, rather than a modeling framework that unfairly penalized U.S.-grown crops for agricultural practices outside the U.S. These changes represent a meaningful step forward for soybean farmers and reinforce the role of domestic agriculture in delivering lower-carbon energy solutions.

By targeted engagement and coalition advocacy, ASA secured a North American ringfence in the final 45Z Clean Fuel Production Credit, permanently limiting eligible feedstocks to North American origin for the life of the tax credit. This provision addresses the surge of imported used cooking oil and other feedstocks, as well as provides long-term certainty for farmers, processors and biofuels producers while reinforcing domestic supply chains.

As the EPA turns to future RFS volume requirements, these improvements to the 45Z credit provide an important foundation for continued growth in domestic biofuels production. The RVO rule for compliance years 2026 and 2027 will lead to an increase in blending volumes for biomass-based diesel. Proposed by EPA in June 2025, it represents the strongest proposed RVO to date and reflects the impact of sustained advocacy with the administration.

Previous RVOs released in 2023 underestimated industry capacity and failed to reflect expansion in biofuels production and soybean crush, weakening demand for soybean oil. The proposed 2026 volumes represent an increase of more than 2 billion gallons over 2025, a historic increase. ASA continues to push for higher targets to stabilize the market and secure long-term growth.

Although we continue to advocate for the soy community, we remain engaged with policymakers and federal agencies to advance durable biofuels policies that strengthen domestic markets, support rural economies, and provide soybean farmers with the certainty they need to plan for the future.