Illinois bets on biodiesel: Expanding the market for domestic soybeans
[June 17, 2026]
By Naomi Taxay and Medill Illinois News Bureau
GILMAN – At Incobrasa Industries, one of four soybean processing and
biodiesel manufacturing companies in Illinois, a construction project is
expected to roughly double the company’s production capacity by
mid-June.
The expansion reflects Illinois’ yearslong investment in biodiesel, a
renewable fuel made from soybean oil. In April, Incobrasa was shipping
out biodiesel faster than it was making it as rising diesel prices and
Illinois’ tax incentives drove increased demand, according to the
company.
The surge highlights how global oil shocks, brought on by the U.S. war
with Iran, and trade uncertainty have increased interest in homegrown
energy alternatives.
Illinois, the nation’s largest soybean-producing state, has long
depended on China as a major buyer of U.S. soybeans. But sharp swings in
exports over the last decade — driven by tariff disputes and growing
competition from Brazil — exposed how vulnerable the industry was to
geopolitics, pushing Illinois farmers, processors and lawmakers to
invest more heavily in domestic markets for the crop.
“We’re absolutely looking to use more of our product here, to make sure
that we’re insulated from trade instability,” said David Kubik, the
Illinois Soybean Association’s biofuels and trade policy manager.
“Regardless of national politics happening around trade, it’s important
to diversify these markets.”
In recent years, more U.S. soybeans have been processed domestically
through “crushing,” which separates the beans into soybean meal for
livestock feed and soybean oil used in products like biodiesel.
According to the U.S. Department of Agriculture’s Economic Research
Service, domestic soybean crush is expected to consume 57% of the U.S.
soybean crop this year, up more than 10 percentage points from 2017.
Kubik said that after the U.S.-China trade war in 2018, farmers and
lawmakers increasingly sought to support biodiesel, which offered both a
new domestic market for soybean oil and a lower-emissions alternative to
traditional diesel fuel. With soybean crushing facilities and widespread
diesel use already in place across Illinois, industry leaders viewed
biofuels to build stronger in-state demand.
By crushing more soybeans to expand biodiesel production, processing
plants like Incobrasa also generate more soybean meal as a byproduct,
lowering livestock feed costs and helping keep meat prices down.
State Rep. Charlie Meier, R-Okawville, who helps operate his family’s
southern Illinois farm, said he saw biodiesel as a way to support
soybean farmers, create jobs and promote cleaner fuel alternatives.
“I’ve burned biodiesel in my tractors and combines for years,” Meier
said. “Why wouldn’t I support the product that’s supporting us?”
Backed by the Illinois Soybean Association and bipartisan lawmakers
including Meier, Illinois passed a bill in 2022 that gradually increased
the amount of biodiesel required to qualify for a sales tax exemption
for retailers. Beginning in April, only B20 — diesel blended with 20%
biodiesel — qualified for the incentive, marking the final step in the
law’s implementation.
“The incentive is pretty strong. 90% of all gallons sold at the retail
level are taking advantage,” Kubik said. “So if you’re fueling at a
diesel pump — at a Love’s, a Pilot, a Casey’s — there’s a 90% chance
that gallon is going to be at the blend.”
Retailers that sell qualifying biodiesel blends receive a sales tax
exemption, allowing B20 to consistently be priced 20 to 40 cents cheaper
than traditional diesel, Kubik said.
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Incobrasa Industries in Gilman, Illinois, is expecting to open its
new processing facilities on June 17. (Medill Illinois News Bureau
photo by Naomi Taxay)
The Illinois Soybean Association estimates the new policy could expand
biodiesel demand from the roughly 165 million gallons per year supported
under the state’s previous 11% content threshold (known as B11) to about
255 million gallons.
Kubik added that expanding biodiesel production can also help lower
traditional diesel prices by adding another source of fuel to the
market. Lower fuel costs can reduce transportation expenses across
industries that rely heavily on diesel to move goods, potentially
lowering costs for consumers more broadly.
University of Illinois agricultural economist Scott Irwin said biodiesel
is unlikely to replace petroleum diesel entirely, particularly because
it remains more expensive to produce over the long run and still depends
heavily on government incentives and renewable fuel mandates.
But as diesel prices surged this spring because of the war with Iran,
Illinois’ growing biodiesel supply may still have helped cushion some of
the shock by adding another source of fuel to the market, Irwin said.
For years, Illinois’ biodiesel investments were largely framed as a
long-term strategy to support soybean farmers and reduce emissions. But
this spring’s oil shock transformed the policy into an immediate
economic test of whether expanding domestic biofuel production could
help stabilize fuel supplies during a global energy disruption.
The B20 policy’s final rollout in April coincided with the fallout from
Iran’s closure of the Strait of Hormuz, which sharply increased
operating costs for industries that rely heavily on diesel to move
freight, operate farms and power industrial equipment — costs that can
ultimately be passed on to consumers.
Diesel markets also tend to operate with tighter inventories than
gasoline, making them more vulnerable to disruptions.
The oil shock has provided a temporary boost for the biodiesel industry,
said Incobrasa quality control manager Kerry Fogarty. But the rising
cost of nearly everything else — including growing and transporting
soybeans, shipping products and purchasing equipment — has largely
offset the additional revenue generated by higher demand.
Incobrasa anticipated the conflict and stockpiled large amounts of
biodiesel ahead of the disruptions, Fogarty said. Even so, the plant was
loading trucks up faster than it was making new fuel. He added that if
the company’s expansion had been completed before the oil shock, the
increased production capacity could have helped Incobrasa both
capitalize on the surge in demand and maintain a steadier fuel supply.
Some of the equipment needed for the expansion is not manufactured in
the United States, Fogarty said, making it subject to steep import
tariffs.
“Not just for Incobrasa, but in general for companies trying to expand,
tariffs have put an unnecessary financial burden on the company,”
Fogarty said. “In some cases, this burden actually prohibits growth.”
Naomi Taxay is an undergraduate student in journalism
with Northwestern University’s Medill School of Journalism, Media,
Integrated Marketing Communications, and a fellow in its Medill
Illinois News Bureau working in partnership with Capitol News
Illinois.
Capitol News Illinois is
a nonprofit, nonpartisan news service that distributes state
government coverage to hundreds of news outlets statewide. It is
funded primarily by the Illinois Press Foundation and the Robert R.
McCormick Foundation. |
