Renewable Diesel in 2027: Strong Demand, Real Opportunity, and a Supply Story Worth Watching
Renewable diesel continues to gain momentum across Canada’s trucking sector, and for good reason. Lowering emissions in transportation is no longer a future aspiration, it’s happening now.
As an immediately available, drop-in fuel, renewable diesel can deliver meaningful emissions reductions without capital investment in engines, infrastructure or new trucks. That ready-to-use simplicity has made it one of the fastest-growing low-carbon solutions on the road today.
While its popularity has grown, the real story heading into 2027 is market dynamics and supply. Domestic renewable diesel production in Canada remains limited relative to demand, and much of the product used here has historically been imported from the United States. However, rapid regulatory-driven demand within the U.S. means less of that supply may be available for export to Canada. In March 2026, the U.S. EPA finalized record-high Renewable Volume Obligations for 2026 and 2027, calling for an estimated 60 per cent increase in biodiesel and renewable diesel blending compared with 2025 levels. As more U.S. production is consumed domestically, Canadian buyers will face greater competition for the remaining available volume.
Feedstocks add another layer of uncertainty. Renewable diesel production depends on the movement of energy products and feedstocks, including used cooking oil, across the Canada-U.S. border. Any future tariffs or trade friction affecting those feedstocks could put additional pressure on production, supply and pricing.
The encouraging news is that Canada is responding. Ottawa has signalled clear intent through proposed amendments to the Clean Fuel Regulations and domestic content measures designed to strengthen Canadian production and reduce reliance on imports. These are promising steps, though building domestic capacity to the level the market requires will take sustained and meaningful support.
Other low-carbon technologies also face challenges, including supply chain constraints and manufacturing pullbacks in the electric commercial vehicle market. As those technologies continue to evolve, renewable diesel offers trucking companies a practical way to reduce emissions using the equipment and infrastructure they already have. That’s why demand has been so strong and why we expect it to remain that way.
Supply may be a curveball in the near term, but the fundamentals remain sound. Renewable diesel is available now, works with existing fleets and can deliver measurable emissions reductions without major capital investment. For trucking companies navigating 2027, the smart move is to work with partners who understand the changing market and can help secure reliable access as supply develops.