Part 1 of this series argued that ReFuelEU Aviation has stopped being a market US producers can plan around, and has become a design specification they have to plan into. Six weeks later, the chess board has moved again. The transatlantic SAF flow assumption that policy modelers built into ReFuelEU compliance projections is being killed not by the regulation’s rigidity alone, but by a parallel set of moves in Washington and Brussels that are making staying inside each market the more rational trade for the producers who actually have the molecules.

Three regulatory moves — one fresh, two still working through the system — now frame the current geometry. On February 4, 2026, Treasury and the IRS published proposed 45Z Clean Fuel Production Credit regulations (REG-121244-23) in the Federal Register, confirming that for fuel produced after December 31, 2025, the underlying feedstock must be produced or grown in the United States, Mexico, or Canada to qualify. The comment period ran through April 6, 2026 and a public hearing was held May 27 to 29, 2026, but the final rule has not yet been issued. That move lands on top of two earlier ones still shaping the field. A year before, Commission Implementing Regulation (EU) 2025/261, dated 10 February 2025 and published the following day in the Official Journal, imposed definitive anti-dumping duties of 21.7 to 35.5 percent — and 10 percent for EcoCeres — on Chinese biodiesel and HVO, with SAF formally excluded from the scope; those duties remain in force. And on February 24, 2025, Air Products’ 8-K disclosed that the company was exiting the SAF expansion agreement with World Energy at Paramount, taking a pre-tax charge of up to 3.1 billion dollars. None of these moves was framed as an SAF policy. All three are now setting the terms of who produces what, for which market.

How Treasury’s January 1 Cut-Off Locked North American Waste Lipids Into the Domestic Market

The 45Z foreign-feedstock restriction is the single sharpest change in the producer chess board this year. Under the proposed rule (REG-121244-23), only feedstocks grown or produced in the US, Mexico, or Canada count for fuel produced after December 31, 2025. Chinese used cooking oil, which had been the marginal supply unit for several US HEFA and renewable diesel operators in 2024 and 2025, is out of the credit pool. Brazilian tallow, already pressured by 50 percent US tariffs imposed in August 2025, is out for a different reason but with the same effect.

The trade response showed up in the data before the final rule was even published. Chinese UCO shipments to the United States in January through October 2025 fell roughly 65 percent year over year, according to Argus reporting. Brazilian tallow imports collapsed from a record 154 million pounds in June 2025 to under 22 million pounds in the fourth quarter, also per Argus. North American waste lipid molecules, including domestic tallow, used cooking oil, distillers corn oil, canola, and camelina, are now worth more inside the 45Z perimeter than outside it. That perimeter is national, not regional.

Calumet, Inc.’s MaxSAF expansion at Montana Renewables is the cleanest illustration. The company’s February 27, 2026 8-K confirms a SAF capacity target of 120 to 150 million gallons per year on a streamlined 20 to 30 million dollar phase one, with full buildout to roughly 300 million gallons per year by 2028 backed by a 1.44 billion dollar DOE loan facility. The same filing cites CEO Todd Borgmann’s reference to progress on 45Z guidance as the project catalyst, and Montana Renewables’ own feedstock disclosures list tallow, canola, distillers corn oil, used cooking oil, and camelina sourced from Pacific Northwest farms and ranches. The post-expansion intent stated by the company is to double seed-oil and tallow purchases from roughly 1.5 billion pounds per year to roughly 3 billion pounds per year. Nothing in the public record allocates that volume to EU offtake. The framing throughout is 45Z economics, not ReFuelEU eligibility.

The transatlantic flow assumption is being killed not by ReFuelEU’s rigidity alone, but by a parallel set of regulatory moves on both sides that make staying home the higher-margin trade for North American waste-lipid SAF.

Why Brussels’ Anti-Dumping Action Tightens the EU’s Eligible UCO Pool

The European chess move is harder to read because it does not target SAF directly. Implementing Regulation (EU) 2025/261 covers HVO and FAME from China, with definitive duties between 21.7 percent and 35.5 percent — and 10 percent for EcoCeres specifically — and explicitly excludes SAF from the product scope. But the upstream effect on Annex IX feedstock supply for ReFuelEU compliance is real. China supplied 41 percent of EU third-country UCO-based biodiesel imports in the first half of 2025, totaling roughly 431,343 tonnes, up about 22 percent year over year according to trade data tracked by S and P Global Commodity Insights. Chinese UCO exports to the EU on a feedstock basis hit 737,000 metric tonnes in 2024.

The Chinese material that historically routed through FAME or HVO into the EU road-fuel pool now faces a 21.7 to 35.5 percent landed-cost penalty (with EcoCeres at 10 percent). Some of that flow will redirect into the unrestricted SAF channel, but only if it can be ISCC EU certified. That certification path is itself under pressure. Argus reported in March 2025 that the EU’s Committee on Sustainability of Biofuels, Bioliquids and Biomass Fuels had discussed a proposal to suspend obligatory acceptance of ISCC EU certification for waste-based biofuels for 2.5 years, with ISCC stating publicly that no vote had been taken. No Commission Implementing Regulation or Delegated Act suspending ISCC EU recognition for waste-based biofuels has entered into force as of this writing, but the proposal itself is sufficient signal to producers that the certification route is contested. Transport and Environment’s June 2024 analysis of ISCC audit coverage, which alleged that roughly 80 percent of EU UCO imports in 2022 carried suspicion of mislabelled virgin palm oil based on a 9 percent physical audit rate at Asian collecting points, is advocacy material rather than a regulatory finding. It is also the political pressure driving the certification scrutiny.

The net effect on the producer map is that Chinese-origin UCO can no longer be the cheap marginal molecule for either US 45Z or EU FAME, and its route into SAF depends on certification quality the Commission is increasingly willing to question. For European buyers writing offtake contracts in 2026, the safer feedstock origin story is now closer to home.

Who Is Positioning for Which Market

The producer-level positioning that follows from these regulatory moves is no longer symmetrical. Diamond Green Diesel’s Port Arthur SAF project, the 235 million gallon per year unit completed on a 315 million dollar capex by Valero and Darling Ingredients, is fed by used cooking oil and inedible animal fats from Darling’s global processing network. The feedstock slate is Annex IX-eligible in principle, but neither Valero nor Darling has issued a primary-source statement positioning Port Arthur tonnage for ReFuelEU. The first publicized SAF cargo from the facility, per trade press, went to a US destination.

Phillips 66 has Tier 2 LCFS pathway applications at Rodeo covering Alternative Jet Fuel, Renewable Diesel, and Renewable Naphtha derived from canola, soybean oil, distillers corn oil, tallow, and used cooking oil. Soybean oil is the awkward asset in that slate. The European Commission adopted Delegated Act 2026/2680 on April 10, 2026, amending Delegated Regulation (EU) 2019/807 to reclassify soybean oil as high-ILUC-risk with phase-out to zero contribution by 2030. The act is currently in its scrutiny period with Parliament and Council; if neither institution objects, it enters into force automatically. Any HEFA pathway running a material soy share is on a depreciating eligibility curve for ReFuelEU even if the certification chain holds. Rodeo and DGD Port Arthur both face this constraint.

The clearest counter-move is on the EU side. LanzaTech’s May 11, 2026 announcement that it selected North Sea Port, Ghent for Europe’s first commercial alcohol-to-jet plant is a 500 million euro project sized at 79,000 tonnes per year SAF and 9,000 tonnes per year renewable diesel, with the ethanol fed directly from ArcelorMittal’s Steelanol plant across the canal. Steelanol produces ethanol from captured carbon monoxide in steel-mill off-gases, a pathway ArcelorMittal is seeking to have classified under RED III as a recycled carbon fuel. That classification has not yet been confirmed. ArcelorMittal stated as recently as May 2026 that the GHG threshold required for RCF status is not currently being met given Belgian grid intensity, and has signalled it may close Steelanol if the classification does not arrive. LanzaTech’s release nevertheless positions the Ghent SAF plant as fully compliant with CORSIA, ReFuelEU Aviation, and the UK SAF Mandate. The upstream feedstock classification, not the downstream ATJ process, is the binding regulatory question for ReFuelEU eligibility. At 79,000 tonnes per year, the plant equates to roughly 2.6 percent of the EU’s estimated 3 million tonne SAF requirement under the 6 percent 2030 mandate, with a three-year construction period and FID still pending. It is a marker that the EU is willing to fund eligible supply inside the perimeter, not a near-term substitute for transatlantic flow.

LanzaJet’s Freedom Pines plant in Soperton, Georgia reached commercial operations on November 13, 2025 at roughly 10 million gallons per year, billed as the world’s first commercial ethanol-to-jet plant. The ReFuelEU eligibility of Freedom Pines output is currently undeterminable from public materials. LanzaJet has not disclosed the specific ethanol source actually being run. Corn ethanol would not qualify under Annex IX. Sugarcane or cellulosic ethanol could. Until the company discloses, neither buyers nor analysts can score the output for European compliance.

Aemetis sits in a similar fog. The California Capital Programs and Climate Financing Authority’s May 21, 2026 initial resolution supporting up to 1.1 billion dollars of tax-exempt financing covers expansion of dairy digesters feeding the Keyes RNG facility and a planned SAF and renewable diesel project with underground CO2 sequestration at Riverbank, California. The press release discloses neither capacity nor feedstock for the SAF unit, and an initial resolution is a tax-exempt designation step, not a financing close.

The Brazilian Wildcard: Why REPLAN’s Sugarcane ETJ Solves a Different Problem

Honeywell’s April 14, 2026 announcement that Petrobras selected Honeywell UOP Ethanol-to-Jet technology for the REPLAN refinery in Paulinia, Sao Paulo, with capacity of up to 10,000 barrels per day SAF subject to final Petrobras approval, was widely covered as a major new SAF route into Europe. The structural reality is narrower. Brazilian sugarcane ethanol is conventional food and feed crop biofuel under RED III. It is not listed in Annex IX. Its favorable low-ILUC standing under existing EU classification reduces sustainability risk but does not change its Annex IX status. SAF produced from food-crop ethanol does not count toward the ReFuelEU SAF mandate, regardless of carbon intensity. REPLAN ETJ would meet CORSIA and serves CORSIA-driven markets in Latin America and Asia. It would not meet the ReFuelEU obligation for European fuel suppliers without separate Annex IX-qualifying feedstock sourcing, which the announced design does not address.

The narrow exception worth flagging is sugarcane bagasse and other cellulosic residues from cane processing, which are listed in RED III Annex IX Part A and would qualify on a feedstock basis if a producer ran them through an Annex IX-eligible conversion pathway. That is a different upstream than the standard sugarcane ethanol route REPLAN is built for, and Petrobras has not announced a bagasse-fed variant.

This is one of the most consistently under-reported structural constraints in the global SAF map. The Latin American ATJ route that gets framed as a backstop for European compliance is solving a different problem.

The European Producers Already Inside the Perimeter

LanzaTech Ghent is the newest entry, but it is not the only one. The producer base that ReFuelEU compliance can actually draw on in 2026 to 2030 is dominated by incumbent European refiners that have been building HEFA capacity for several years. Neste’s Rotterdam expansion lifts its SAF nameplate to around 500,000 tonnes per year. TotalEnergies’ Grandpuits BioRefinery is being converted to renewable products including SAF. OMV’s Schwechat coprocessing route, Repsol’s Cartagena renewable fuels unit, Cepsa’s Huelva HVO and SAF project with Apollo, and ENI’s Gela bio-refinery all run on waste lipid or coprocessed feedstock and are positioned within the ReFuelEU eligibility perimeter. The chess piece that has shifted in 2026 is not that European producers exist. It is that the EU is now also funding fundamentally new feedstock pathways such as Steelanol-LanzaTech rather than relying solely on the HEFA incumbents.

The Air Products Retreat and What It Signals

The single capex signal most often cited as undermining the US-to-EU flow assumption is Air Products’ February 24, 2025 exit from the World Energy Paramount SAF expansion. The 8-K disclosed a pre-tax charge of up to 3.1 billion dollars, of which roughly 2.4 billion was non-cash plant and equipment writedown attributable to the Paramount project. Air Products framed the exit as a strategic capital reallocation; the filing does not attribute the decision to ReFuelEU or 45Z. As a single project decision it is therefore idiosyncratic. As a directional signal, however, it is consistent with the broader pattern: World Energy’s public statement that current Paramount operations were unaffected has been followed by the company spokesperson confirming in February 2026 that the facility is not producing fuel while the situation is worked through, per trade press. Gevo’s April 15, 2026 withdrawal of its DOE loan application, with a pivot from the Lake Preston Net-Zero 1 ATJ-60 project to its ATJ-30 facility at Richardton, North Dakota, is a smaller but parallel signal. World Energy’s second SAF hub at Houston, originally targeted for startup by 2025, has been reported in trade press as delayed by roughly two years.

The announced-capacity layer of US SAF projects specifically positioned for the EU window is contracting. Aggregate US renewable fuels capacity is not the same thing and is not the claim being made here.

What to Watch

The first item is the Commission’s final position on ISCC EU UCO recognition. A confirmed pause would force European fuel suppliers to either accept lower certification-coverage and absorb the audit risk, or write contracts for North American or European-origin feedstock at a cost that closes part of the 45Z arbitrage. The second is whether any major US producer makes the move LanzaTech made on the EU side: a public announcement positioning specific tonnage for ReFuelEU compliance, with named Annex IX feedstock origins and a recognized certification scheme. Calumet, Inc., Diamond Green Diesel, and Phillips 66 all have the asset base to do it. None has, as of June 2026. The third is the European Commission’s pending classification of soybean oil as high-ILUC-risk. Adoption would force the HEFA capacity at Port Arthur and Rodeo to choose: reformulate the feedstock slate for the eligible export window before 2030, or treat the EU market as a closing door.

Key Takeaways

• Treasury’s February 4, 2026 proposed 45Z regulations (REG-121244-23) cut off imported feedstock for fuel produced after December 31, 2025. Chinese UCO shipments to the US fell roughly 65 percent year over year in January to October 2025 and Brazilian tallow collapsed from 154 million pounds in June 2025 to under 22 million pounds in Q4 2025.
• Commission Implementing Regulation (EU) 2025/261 imposes definitive anti-dumping duties of 21.7 to 35.5 percent on Chinese HVO and FAME (with EcoCeres at 10 percent), formally excluding SAF but reshaping upstream UCO routing into Europe. China supplied 41 percent of EU third-country UCO-based biodiesel imports in H1 2025.
• Air Products’ February 24, 2025 8-K exit from the World Energy Paramount SAF expansion booked a pre-tax charge of up to 3.1 billion dollars and removed the most visible US SAF capex line item targeting the EU window.
• LanzaTech’s May 11, 2026 selection of Ghent for a 500 million euro, 79,000 tonne per year SAF plant fed by ArcelorMittal’s Steelanol carbon-capture ethanol explicitly positions the project for ReFuelEU, CORSIA, and the UK SAF Mandate. The EU is rebuilding eligible supply inside the perimeter rather than waiting for US flow.
• Petrobras and Honeywell’s REPLAN ETJ project (up to 10,000 barrels per day) is a CORSIA play, not a ReFuelEU play. Brazilian sugarcane ethanol is conventional food and feed crop biofuel under RED III and is not in Annex IX, regardless of its favorable low-ILUC status.

Source: Federal Register, REG-121244-23 proposed 45Z rule; EUR-Lex, Commission Implementing Regulation (EU) 2025/261; Commission Delegated Regulation (EU) 2026/2680 (soybean ILUC); Air Products 8-K February 24, 2025; Calumet 8-K February 27, 2026; LanzaTech Ghent announcement May 11, 2026; ArcelorMittal Steelanol status May 2026; LanzaJet Freedom Pines commissioning November 13, 2025; Honeywell/Petrobras REPLAN April 14, 2026; Aemetis CPCFA initial resolution May 21, 2026; EIA Today in Energy May 7, 2026; Argus Media trade reporting on UCO and tallow flows; S&P Global Commodity Insights data on EU UCO-based biodiesel imports.