Biofuels M&A: 2024 Review & Outlook: Boosted by Exports, Ethanol M&A Stars in Tangled Biofuels Market

by Bruce Comer, Frank Kim, Zak Putlak, and John Panvica (Ocean Park/Biofuels Digest) In a biofuels sector grappling with policy uncertainty and a new federal administration, there were promising capital investments and above average ethanol M&A volume, driven by export growth and profitable carbon capture and sequestration (CCS). The home run: Gevo’s landmark $210M purchase of Red Trail Energy. Overall, five operating ethanol plants and one non-operating plant totaling 570 MGPY of capacity changed hands in five deals. M&A activity in biomass-based diesel (BBD) was minimal with two non-operating biodiesel (BD) plants auctioned for a total of 20 MGPY.

Policy uncertainty, particularly around the Inflation Reduction Act (IRA), is hindering M&A activity. Sellers expect benefits from future policies while buyers are cautious without qualifying projects generating cash flow. It’s hard to feel confident when politicians and regulators are certain to keep changing the rules, but the floor is solid enough that investors have poured billions into carbon capture initiatives, refinery conversions for Sustainable Aviation Fuel (SAF) and securing feedstock. It’s important to keep an eye on Renewable Diesel (RD) and BD producers’ declining or negative margins due to oversupply and minimal increases in compliance volumes under the Renewable Fuel Standard (RFS).

The story of 2024: ethanol M&A. Five operating and one non-operating plant changed hands. The five transactions involved six plants with a healthy 570 MGPY of combined capacity:

If there was more ethanol M&A activity than expected, it’s because robust exports and CCS capabilities overshadowed large capital investments in decarbonization, plant expansions, and high-protein installations that may have diverted funds away from M&A. Additionally, valuation gaps fueled by uncertainty around IRA credits, have created friction, as buyers hesitate to pay for speculative decarbonization value for plants without significant policy certainty. But in the end, Tier 1 plants with direct-inject CCS capabilities, like Red Trail, should continue to command premium valuations. Additionally, record ethanol exports, projected at 1.9B gallons, and rising interest in SAF opportunities add to the sector’s M&A buy-side demand, despite challenges from inconsistent EBITDA performance and macro supply-demand dynamics.

There were two transactions in 2024 involving two plants and 20 MGPY of capacity.

Unlike ethanol, the biodiesel sector is facing significant distress, which has dampened M&A activity. The number of independent biodiesel plants has declined steadily since 2020, leaving only 10–15 remaining in operation. Integrated producers now control about 70% of production, further limiting the pool of assets available for consolidation. Low RIN and Low Carbon Fuel Standard (LCFS) prices, driven by oversupply, have squeezed margins, leading to bankruptcies, plant idling, and even scrapped facilities. Not surprisingly, buyers have little interest in buying up unprofitable plants. Recent auctions and sales for distressed assets failed to drum up significant interest.

Renewable diesel is also struggling with oversupply and margin pressures. RD now accounts for approximately 65% of biomass-based diesel production in the U.S., driven by integrated oil companies focused on meeting compliance obligations. In 2024, ~1.5 BGPY of new capacity came online. This surge in production has flooded the market with advanced biofuels RINs and LCFS credits, pushing margins into thin or negative territory. Integrated RD producers remain focused on securing feedstock supply rather than acquiring additional production capacity. Given their dominance and strategic priorities, there is little appetite for M&A.

SAF / Advanced Biofuels M&A and Announcements

There was one notable transaction in 2024 involving one plant with 11 MGPY of capacity.

SAF has generated significant attention, but the nascent market remains very small, with only 30-40 MGPY of SAF produced in the U.S. in 2024. Despite this, there has been a surge in investment from oil refiners and new players aiming to enter the space.

Amid these shifts, industry stakeholders are closely watching proposed rulemaking for IRA provisions, including Section 45Z which incentivizes biofuel producers to lower their Carbon Intensity scores. However, concerns remain that some provisions could be heavily limited. In California, the California Air Resources Board (CARB) has adopted updates to the LCFS, raising carbon intensity reduction targets. CARB has also imposed stricter regulations on feedstocks, limiting fuel made from soybean, canola, and sunflower oil to 20% of a company’s annual production. These updates, combined with the fact that California consumes 80% of renewable diesel, will be closely watched as new capacity comes online.

The policy outlook under the new administration is expected to be less supportive of ethanol, with refinery waivers re-entering the picture, creating additional supply and demand pressures. The potential impact of tariffs on ethanol trade further complicates the supply-demand dynamic, although the possible revisit of E15 could offer some offsetting support. READ MORE

Excerpt from ICF/Biofuels Digest: This is a 2025 presentation slide deck from Mike McCurdy of ICF, a global consulting firm, on the state of sustainable aviation fuel (SAF). The presentation analyzes the market dynamics of SAF, including the impact of various governmental policies and tax credits, such as the Low Carbon Fuel Standard (LCFS) and the Inflation Reduction Act (IRA) tax credits. Key themes explored include price forecasting for SAF, RIN (Renewable Identification Number) pricing, and the projected build-out of SAF production capacity in North America. The ultimate purpose is to inform stakeholders on the current state and future outlook of the SAF market. READ MORE