Tariffs Hit U.S. Biofuel Supply Chain

Rising Feedstock Costs Impact Green Fuel Goals

The U.S. biofuel industry is under pressure as tariffs on key imports disrupt the supply chain for renewable energy producers. LanzaJet Inc., aiming to be the first commercial producer of green jet fuel from ethanol, finds its plans affected by new U.S. tariffs on Brazilian ethanol. 

Located in Georgia, the plant had hoped to rely on climate-friendly ethanol imports from Brazil. However, US-made ethanol doesn't meet the low-carbon standards to qualify for the federal 45Z tax credit.

“If this tariff holds true on ethanol imports, the result is a higher cost SAF product that we are making in the U.S.,” said Jimmy Samartzis, CEO of LanzaJet. “There is no alternative for a US-produced ethanol that qualifies.”

The tariffs reflect a wider challenge in U.S. biofuel policy. They create uncertainty for importers, increase costs for green fuel projects, and may invite retaliatory measures from trade partners.

Used cooking oil (UCO), mostly imported from China, has also come under scrutiny. With imports rising to 2.8 billion pounds in 2024, the former administration has restricted UCO from qualifying for tax credits, fearing fraudulent shipments.

These twin setbacks — tariffs and restrictions — are straining the renewable diesel industry. The shift may open new opportunities for U.S. soybean farmers. As UCO becomes less attractive, soy oil could rise in value and demand.

Experts urge the government to align biofuel incentives with domestic agriculture. CHS Inc.'s Ken Zuckerberg summarized the moment: “It’s a remaking of the ag order.”