(Photo: Iowa Soybean Association / Joclyn Kuboushek)
Fueling biofuel's progress
September 2, 2026 | Matt Herman
Last year, I wrote that farmers were losing their grip on a market they helped create. For nearly three decades, checkoff investment, research and farmer leadership turned soybean oil from an oversupplied byproduct into a $20 billion bio-based diesel market. Then the policy landscape began to incentivize global sourcing of non-crop feedstocks, shifting demand away from the farm.
Now, 18 months after starting this project, the market is showing us the seeds we sowed are bearing fruit. The U.S. Energy Information Administration data show that soybean oil use in biofuel production went from 1.233 billion pounds in December 2025 to 1.761 billion pounds in April 2026, a 43% gain. Soybean oil has clawed its way back to roughly 45% of the feedstock pool, up from 39% over the same period. Meanwhile, used cooking oil (471 million pounds) and tallow (660 million pounds) slipped to about a 12% and 17% share, respectively, down from 14% and 24%.
California: Pushing back on overregulation
A year ago, California regulators had just proposed new sustainability guardrails for the state’s Low Carbon Fuel Standard. A literal interpretation of that regulation could have required field-level proof that every bushel came from land cultivated before 2008.
After nearly 15 months of research and education, on July 14 the California Air Resources Board issued updated guidance that lets fuel producers use an economic draw area approach for the 2026 and 2027 crops. Instead of tracing every load to an individual field, an elevator or soybean crusher can define a reasonable sourcing area, screen acres using USDA or other available data and exclude acres that may have been deforested.
While this was a victory, there are even stricter requirements already in regulation. Starting in 2028, the proposed requirements would escalate, pushing the entire supply chain toward an EU-centric certification scheme. Iowa Soybean is already working with our partners at American Soybean Association, other state associations and the National Oilseed Processors Association on strategies to reduce or eliminate this future regulatory burden.
Indirect Land Use Change: Opening the black box
I have long described indirect land-use change (ILUC) as a black box. This summer, the Iowa Soybean Association and the American Soybean Association took a major step toward demystifying it, hiring Omid Karami, an expert in the modeling of land use change. Omid is leading the effort to make the process of ILUC modeling transparent while positioning U.S. soybean farmers for success in domestic and international biofuel markets.
The stakes are large. California assigns soy a current ILUC carbon intensity of 29.1, more than the entire farming, crushing and biofuel production supply chain combined. Internationally, Brazil is trying to create global recognition that double-cropped soybeans and corn shouldn’t carry a land-use penalty, something that would significantly hobble U.S. farmers and risk ceding Brazil a large share of the global marine and aviation market.
Used cooking oil: No longer a waste?
Over the past few years, it became clear that used cooking oil (UCO) was taking market share from soybean oil on the basis that it was a ‘waste’ carrying no starting carbon footprint. These favorable environmental assumptions let UCO price at or above soybean oil. In July, the research team submitted a paper challenging those assumptions to Energy Policy for peer review.
Our paper tested five carbon accounting methods against the current baseline, which puts UCO biodiesel at about 18 gCO2e/MJ. The alternatives produce an estimate of roughly 21 to 58 gCO2e/MJ, a 1.2 to 3.2 times increase from the baseline.
We are not arguing UCO shouldn’t be used and we are not recommending any one method. However, we are saying that if waste becomes a globally traded feedstock with a high value, markets should reconsider the assumption of zero upstream emissions while first use raw materials like soybean oil carry their full burden.
Co-processing: An untapped demand pathway
Finally, we concluded an analysis of co-processing, a technology that can create demand for soybean oil and a wide range of feedstocks but has for years been left out of state and federal incentive programs. We set out to estimate what equal treatment would mean for farm income and standalone biofuel production. Our final report estimates that blending 5% soybean oil into existing refineries could create between 204 million and 1.7 billion pounds (137 million bushels) of annual soybean oil demand, depending on policy support. These are only scenarios and deserve scrutiny, but they point to large, domestic markets ahead.
Today, we can point to workable compliance in California for the next few years, a new strategy on indirect land-use change, legitimate flaws we have found in the carbon intensity of cooking oil and further investigation of new markets with measurable demand potential. Farmers built the biofuel market by organizing and leading with research and data. It’s a tried and true path we intend to follow.
Matt Herman is the chief officer of demand and advocacy for the Iowa Soybean Association and co-leads the Farmers Fueling the Future initiative with Omid Karami, senior economist at the American Soybean Association.
Sidebar
Farmers Fueling the Future Mission:
To maximize market value for crop-based biofuels, ensure resilient and economically efficient agricultural systems and support research aimed at expanding crop-based biofuel demand.
Three Key Focus Areas
Indirect Land Use Change (ILUC)
Lead the coordinated research and development of alternative approaches to indirect land use change assessment in U.S. biofuel markets while supporting research to reduce the ILUC scores using current modeled approaches.
Reducing Direct Greenhouse Gas Emissions
Coordinate and commission research to support the reduction in carbon intensity scores for domestic soy, canola, corn and other member crops. Work with initiative partners to ensure that carbon intensity scoring methodologies reflect and prioritize sound agronomic practices that promote a resilient and robust food and feed market.
Improve Access for Crop-Based Biomass and Crop-Based Fuels
Support efforts to gain market access for member biomass in biofuel markets when appropriate (e.g., soybean oil, canola oil). Coordinate dialogue between the biodiesel, renewable diesel, and oil industry to update labeling rules which are limiting farmers’ access to lucrative incentives in the West Coast and Midwest markets.
Written by Matt Herman.
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