Waiting on 45Z: Markets Stretched Ahead of Treasury’s Guidance Carbon Accounting Pivot
U.S. biofuel markets are facing a demand retrenchment just as production remains stubbornly high. The latest data from California’s LCFS shows Q1 2025 renewable diesel use fell by over 140 million gallons from Q4 2024, while biodiesel dropped nearly 15 million gallons. This confirms the steep impact of the expired $1/gal blender's tax credit. The D4 RIN screen closed today at 1.20, while the BOGO spread held strong at +518 $/mt, underlining the continued economic pressure on soybean oil as a feedstock. With oil share still hovering around 50%, and the curve still flat to firm, many in the trade are starting to question whether the soybean oil complex is overbought — especially considering the surge in call option positioning, including over 12,000 open contracts at the 60 strike for December.
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