Renewable diesel and SAF: Cycles

How a credit boom built plants and then crushed margins

HVO margins are the gap between fuel value (diesel or jet plus RIN, LCFS, 45Z or EU ticket values) and fat prices. A credit boom in 2021-23 led to a capacity rush, which pushed up fat prices and drove down LCFS and RIN credits, collapsing margins in 2024. Policy changes (the switch from the US blender credit to 45Z in 2025, final RFS volumes in 2026) then restored them. SAF prices are set by mandates rather than markets.

Neste's margin was $411/t in 2025. SAF sells at about twice fossil jet and up to five times in mandated markets; airlines paid $1.4 billion standard premium on 1.9 Mt in 2025 (IATA).

Booms and busts

1. 2021-2023

   High LCFS and RIN values led to refinery conversions and new plants in the US; capacity grew to 4.72 billion gallons by Jan 2025 (EIA).

   not retrieved

2. 2024

   Oversupply of renewable diesel and low credit prices cut margins; Neste's comparable sales margin fell to $242/t in Q4 2024.

   Neste sales margin $377/t for 2024 (Neste)

3. 2025

   The 45Z credit replaced the blender credit and excluded imports; US output ran at about 61% of capacity; margins recovered late in the year.

   Neste margin $479/t in Q4 2025; $411/t for 2025 (Neste)

4. 2026

   EPA finalised record RFS volumes (9.07 billion BBD RINs in 2026) and half RINs for imports from 2028; record D4 RIN prices reported (farmdoc).

   D4 RIN level not retrieved

What drives the cycle

• Credit values. RIN, LCFS, 45Z and EU ticket prices can exceed the fuel value of HVO.
• Waste fat supply. UCO and tallow are limited; demand from new units raises their prices toward virgin oils.
• Mandates. ReFuelEU, the UK mandate, Japan and India's 2027 SAF rule create guaranteed SAF demand.
• Trade rules. EU duties and US import exclusions decide whether Asian HVO and UCO can compete.

Metrics to track