U.S. refiners profit from biofuel mandates as Valero, HF Sinclair earnings rebound

U.S. oil refiners are turning renewable fuels into a profit center after new Environmental Protection Agency mandates in March 2026 lifted demand and stronger diesel prices widened margins. The EPA rule requires record biofuel blending volumes in 2026 and 2027, including a 60% increase in biodiesel and renewable diesel use, while maintaining about 15 billion gallons of annual ethanol blending. Valero (VLO), the largest U.S. biofuel producer, reported a $139 million first-quarter renewable diesel profit, compared with a $141 million loss a year earlier. Its ethanol profit more than quadrupled. HF Sinclair (DINO) posted a $133 million renewable diesel profit after a $17 million loss. Renewable Identification Number credit prices for biodiesel, renewable diesel and ethanol have risen more than 80% in 2026 to above $2, LSEG data showed. Still, expansion remains uncertain after Chevron (CVX) idled two Midwest biodiesel plants in 2024 and Vertex Energy (VTNR) paused renewable diesel output in Alabama. Higher soybean oil costs and a 46% diesel price surge may favor conventional diesel output.