Domestic used cooking oil supply is under pressure. As renewable diesel producers push to meet record blending mandates under the RFS, the gap between what American restaurants generate and what refineries actually need is growing, and the market might start looking abroad for relief.
The expectation heading into summer is that more international UCO will find its way into the U.S. market. No confirmed wave yet, but the conditions are there. Domestic feedstock has been struggling to keep pace with demand, and foreign material has historically come in cheaper than domestic on a per-pound basis. When that price spread is wide enough, it moves boats.
The 45Z question is real but not a dealbreaker. Imported UCO lost eligibility for the 45Z Clean Fuel Production Credit under guidance issued in 2025, which removed a meaningful incentive layer. But refineries aren't necessarily walking away from foreign material. UCO remains attractive to producers aiming to sustain profitability under RIN and LCFS credit systems, and for many facilities, those two stacks alone are enough to justify the trade. A refinery that can buy foreign UCO at a discount and still clear strong D4 RINs plus California LCFS credits doesn't need 45Z to make the math work.
EPA itself projects that imported feedstocks could form over 45% of total biomass-based diesel supply in line with the proposed 2026 and 2027 RFS volumes, a figure that signals where the market may structurally be headed regardless of near-term policy noise.
For domestic collectors, this is worth watching. If significant import volume arrives this summer, it puts a ceiling on how far domestic prices can run. For traders and brokers, the setup is there and the arbitrage story just needs confirmation.
Domestic collection isn't going away. But it can't scale fast enough to meet a demand curve driven by federal blending policy. If that gap holds through the summer, imports won't be a backup plan. They'll be part of the base case.
