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U.S. Producers’ Netbacks for Renewable Diesel: Mapping Volumes Amid a Global Price Shock

U.S. Producers’ Netbacks for Renewable Diesel: Mapping Volumes Amid a Global Price Shock

Key Takeaways

The Iran-U.S. conflict has pushed oil prices up by 57.63% from December to March, driving a sharp rise in U.S. renewable diesel prices. By 30th March, prices in California reached $7.22/gal, while the broader West Coast (excluding California) climbed to $6.36/gal, supporting stronger domestic net returns.
U.S. producers’ netbacks for U.S. domestic markets have strengthened at an average of $1.38 from Dec to March, with California and Oregon rising by $1.40, and Washington by $1.32.
Within the U.S. domestic markets, Oregon maintains the lead due to higher credit prices, with a $0.19/gal premium over California and $1.33 over Washington for March.
Netherlands remains the most attractive export destination with producers’ netback spreads of $0.85/gal and $1.04/gal over Oregon and California, respectively.
Flows to Canada will remain opportunistic, with a $1.35/gal netback deficit in British Columbia relative to California, positioning it as a residual balancing market.

Geopolitical Shock and the Surge in Renewable Diesel Prices

The current global oil market has become increasingly volatile as the ongoing conflict involving Iran continues to disrupt primary supply routes. The functional closure of key transit points such as the Strait of Hormuz has pushed oil prices higher by 57.63% from December to March as uninterrupted supply remains a concern. As a result, U.S. diesel futures have reached multi-year highs, putting significant upward pressure on downstream costs across transportation and industrial sectors.
Given that renewable diesel prices are closely linked to regional diesel markets—which are in turn influenced by crude oil benchmarks such as NYMEX WTI in North America and ICE Brent in Europe—these dynamics are also translating into higher renewable diesel price realizations.

The analysis utilizes regional No 2 diesel retail prices as the primary revenue basis for calculating cCarbon producers’ netbacks. Renewable diesel prices are assumed to be aligned with regional diesel prices.

The strengthening of domestic prices is challenging the export arbitrage that has driven renewable diesel exports since 2025. Retail price data shows a relatively stable trend through 2025 and early Q1 2026, followed by a clear increase beginning in March 2026 as illustrated in the figure below:

Diesel Retail Prices in major U.S. markets Weekly

Source: U.S. EIA

By 30th March 2026, diesel selling prices in California reached $7.219/gal, while the broader West Coast (excluding CA) climbed to $6.056/gal. At the same time, monthly RD production continues to exceed domestic product supplied through March 2026, with EIA projections extending through December 2026. This sustained surplus, combined with existing inventories, allows producers to direct volumes toward the most profitable markets. Where export netbacks are insufficient, surplus supply is likely to remain in inventory, preserving optionality. Notably, the EIA’s forecast framework explicitly incorporates these geopolitical developments, with price expectations highly dependent on the duration of conflict in the Middle East.

Source: U.S. EIA

Building on the analysis of Decoding U.S. Renewable Diesel Flow: Market Dynamics Through 2025, which examined how volumes moved toward international markets based on regional incentives and policy mandates, the chart below illustrates total U.S. renewable diesel exports across key international destinations including Belgium, Canada, the Netherlands, Norway, and the UK. However, the current pricing environment raises a new strategic question: With domestic netbacks reaching multi-year highs, do export netbacks in Europe and Canada remain attractive enough to justify reallocating U.S. volumes away from the domestic market or inventory?

Source: U.S. EIA

To address this question, cCarbon has calculated a simplistic measure of producer netbacks for U.S. renewable diesel producers across major export destinations. Netbacks are defined as the sum of the renewable diesel selling price and applicable incentive revenues—including state-level clean fuel incentives and federal incentives—minus feedstock costs and applicable freight costs (the latter considered only for exports to Europe). Feedstock costs are proxied using eight times soybean oil futures, reflecting the assumed conversion ratio. For the purposes of this analysis, changes in other production costs have been excluded.
The analysis focuses on renewable diesel produced from soybean oil feedstock and assumes that the average CI for Q4 2025 and Q1 2026 remains consistent with Q3 2025 levels.
The U.S. and Canadian incentives are calculated using Analytics Toolkit Details – cCarbon

Increasing Renewable Diesel Netbacks in U.S. Market

U.S. Producers’ Netback analysis across key West Coast renewable diesel markets, such as California, Oregon, and Washington, further highlights this trend. Netbacks incorporate the D4 biodiesel RIN alongside 45Z and applicable state level CFS program incentives, providing a standardized framework for evaluating trade economics.

Producers Netbacks for U.S. RD Producers

Source: cCarbon Analysis on data from U.S. EIA

Producers’ netbacks, which remained relatively stable through most of 2025, began to rise sharply in early 2026. By March 2026, netbacks had reached multi year highs across all three states, with Oregon maintaining the lead with a $0.19/gal premium over California and $1.33 over Washington for March, supported by a stronger incentive framework that enables superior net returns for producers. Beyond these specific state-level dynamics, the entire West Coast has experienced a broad strengthening of producers’ netbacks. Overall, this improving netback environment suggests that domestic market conditions are becoming increasingly favorable. A key question, however, remains: has netback expansion in domestic markets outpaced the netback growth in international markets for U.S. producers?

International Export Arbitrage vs U.S. Domestic Parity

To evaluate whether U.S. domestic netbacks are outperforming international benchmarks, this analysis compares major U.S. West Coast markets against the primary export destinations: the Netherlands and Canada. The evaluation specifically focuses on renewable diesel (RD) produced from soybean oil feedstock. These netback estimates incorporate the D4 biomass-based diesel RIN, alongside applicable state and federal credits and a constant freight cost assumption of $28/tonne for the Netherlands providing a standardized basis for evaluating trade economics.

The European Export Netbacks Play

The Netherlands has historically been a major importer of U.S. renewable diesel and remains the premier global benchmark. Following the transposition of the Renewable Energy Directive III (RED III) into national law from January 2026, the market has seen a dramatic expansion in netbacks for U.S. RD producers. This upward trend has further escalated in March 2026 as escalating geopolitical tensions pushed diesel prices sharply higher, lifting renewable diesel netbacks, with spreads over Oregon and California widening to $0.85/gal and $1.04/gal, respectively.

Producers Netbacks for U.S. RD Producers EU vs US

Source: cCarbon Analysis on data from U.S. EIA and Statistics Netherlands (CBS)

While U.S. producers face trade barriers, notably the anti-dumping duties under Implementing Regulation (EUR 172.2 per tonne net), the sheer scale of export netbacks into the Netherlands appears to absorb these costs. Given the production surplus and the potential drawdown of inventories to capitalize on record‑high prices, the Netherlands is likely to remain the primary destination for high‑value arbitrage.

The Canadian Export Netbacks Play

Canadian exports face a netback deficit of $1.45/gal, with British Columbia at a $1.35/gal deficit, both relative to California.

Producers Netbacks for U.S. RD Producers Canada vs U.S

Source: cCarbon Analysis on data from Natural Resources Canada

While U.S. producers will likely prioritize local sales if high-priced renewable diesel is absorbed domestically, Canada will continue to serve as the natural outlet for surplus volumes if elevated pump prices begin to weaken U.S. demand. Unlike the U.S., Canadian export netbacks are primarily supported by clean fuel incentives rather than high retail prices, preserving consumer affordability.

Source: cCarbon Analysis

Conclusion

The geopolitical price shock of early 2026 has increased producers’ netbacks for U.S. renewable diesel producers across all regions, with the Netherlands remaining the premium destination. The extreme volatility of fossil fuel markets strengthens the argument for accelerating biofuel investment to improve long-term energy security. Ultimately, the future of the U.S. producers’ netbacks play depends on this policy balance and logistical stability. As producers may draw down inventories to maximize current returns, flows will likely follow a tiered priority: capturing peak arbitrage in Europe while feeding a highly competitive domestic market. Canada remains the structural anchor, providing the necessary capacity to clear residual surplus.