Written on: May 8, 2026 by Joe Uglietto
It’s been one hell of a ride in our industry over the past six months. An incredibly cold Winter brought increased gallons and strong margins for many companies. However, it also brought significant operational challenges, taxing the ability of companies to keep up with deliveries and serve their customers. The war with Iran then brought extreme price volatility that is continuing to impact the markets. I am hopeful that by the time of this column’s publication, things will have calmed down. Peppered throughout the Northeast, States have been delaying their market-based decarbonization programs, providing dealers with a break and an opportunity to focus on their business without the imminent launch of Clean Heat Standards (CHS) or Cap-and-Invest programs.
With most market factors trending towards uncertainty, there has been one welcome shift towards stability, and the timing couldn’t be better. Biodiesel blending is ramping up, even in States where mandates aren’t currently in place. After a 12–18 month hiatus, blending is picking up because there is certainty in the market thanks to the Section 45Z Clean Fuel Production Credit, and companies are jumping back in to take full advantage.
In the States that have biodiesel mandates in place—New York, Rhode Island and Connecticut—wholesalers are blending biodiesel at the rack. What’s perhaps even more encouraging is that we are beginning to see more blending taking place in the States without mandates, either because there are programs—like Massachusetts’ Alternative Energy Portfolio Standard (APS)—that make it financially attractive to do so, or because of demand for a blended product from retailers, consumers or both.
In States such as Massachusetts, retailers will be incentivized to increase their blends beyond what may be sold at the rack. Looking at the biodiesel suppliers in the Northeast, we have traditionally seen Kolmar Americas in Connecticut and Chevron Renewable Energy Group in Massachusetts supply retailers participating in the APS program, which incentivizes biodiesel blends above a B10 at the retailer level. Recently, due to increasing demand, we’ve seen RenStar enter the Northeast biodiesel supply market with a terminal in Providence, RI. I believe we will see more biodiesel suppliers enter the market over the next few years as demand grows from mandated markets and market-based decarbonization markets. It’s also important to consider that biodiesel demand will grow in the transportation, marine and aviation sectors. The heating oil market in the Northeast and Mid-Atlantic is a multi-billion gallon-per-year industry and displacing a significant number of those gallons with biodiesel will require additional supply and market transformation.
What should heating oil retailers be doing now to prepare for this market shift? The first and most important thing to do, if you haven’t already done so, is to commit to getting back to blending. Dealers are lining up to increase their blends now that the economics are more favorable. That favorability may be even larger, depending on where things go with global oil supplies in the coming months. The second is to establish relationships with biodiesel suppliers that are currently in the Northeast and Mid-Atlantic. When biodiesel demand begins to increase over the next few years, it will be vital for heating oil retailers to have the logistics, storage, blending and supply of this fuel in place in order to adapt to the changing business environment. The sooner heating oil retailers begin blending biodiesel and establishing relationships with suppliers, the more seamless the transition to higher blends will be when policy demands it.
Now that we have greater certainty in the bio markets, biodiesel planning and blending can begin to deliver returns immediately while also setting your company up for success within future market-based decarbonization programs. ICM
Renewable Energy Insights is a regular column by Joe Uglietto, President of Diversified Energy Specialists, with a focus on emissions reductions & renewable energy innovation. DiversifiedEnergySpecialists.com
