Renewable diesel to outstrip supply of biodiesel in US
The US Energy Information Administration (EIA) in its Annual Energy Outlook 2022 projects that renewable diesel supply will exceed biodiesel supply in the near term.
The EIA projects that renewable diesel supply will increase to 130,000 barrels per day (b/d) in 2022 and 145,000 b/d in 2050, reflecting a significant increase in renewable diesel production capacity.
Biomass-based diesel fuels include biodiesel and renewable diesel, both of which are refined from the same types of fat, oil, and grease feedstocks.
Renewable diesel is chemically indistinguishable from petroleum diesel (known as a drop-in diesel fuel), meaning that it meets specifications for use in existing infrastructure and diesel engines and is not subject to any blending limitations.
Biodiesel is a mixture of chemical compounds known as alkyl esters and is often combined with petroleum diesel in blends of 5% to 20%, known as B5 to B20, respectively.
The EIA projects that production of renewable diesel supply will grow because of its compatibility with existing distribution infrastructure and engines, higher state and federal targets for renewable fuel production, incentives from tax credits, and the conversion of existing petroleum refineries into renewable diesel refineries.
Targets and incentives that contribute to renewable diesel’s growth include the Renewable Fuel Standard, California’s Low-Carbon Fuel Standard, and the US biomass-based diesel blender credit, which currently applies through 2022 and allows qualified taxpayers to claim a credit of $1/gallon when the required amount of biodiesel or renewable diesel is blended with petroleum diesel for sale or use in a trade or business.
In response to the improved economics of renewable diesel due to these policy actions, domestic production capacity has increased, both in the form of new stand-alone facilities and converted petroleum refineries.
The EIA assumes that policies, rather than market demand, drive the adoption of biomass-based diesel fuels.
Renewable diesel and biodiesel compete for the same feedstocks, so some of the projected growth in renewable diesel production displaces biodiesel production.
The EIA projects that renewable diesel supply will increase to 130,000 barrels per day (b/d) in 2022 and 145,000 b/d in 2050, reflecting a significant increase in renewable diesel production capacity.
Biomass-based diesel fuels include biodiesel and renewable diesel, both of which are refined from the same types of fat, oil, and grease feedstocks.
Renewable diesel is chemically indistinguishable from petroleum diesel (known as a drop-in diesel fuel), meaning that it meets specifications for use in existing infrastructure and diesel engines and is not subject to any blending limitations.
Biodiesel is a mixture of chemical compounds known as alkyl esters and is often combined with petroleum diesel in blends of 5% to 20%, known as B5 to B20, respectively.
The EIA projects that production of renewable diesel supply will grow because of its compatibility with existing distribution infrastructure and engines, higher state and federal targets for renewable fuel production, incentives from tax credits, and the conversion of existing petroleum refineries into renewable diesel refineries.
Targets and incentives that contribute to renewable diesel’s growth include the Renewable Fuel Standard, California’s Low-Carbon Fuel Standard, and the US biomass-based diesel blender credit, which currently applies through 2022 and allows qualified taxpayers to claim a credit of $1/gallon when the required amount of biodiesel or renewable diesel is blended with petroleum diesel for sale or use in a trade or business.
In response to the improved economics of renewable diesel due to these policy actions, domestic production capacity has increased, both in the form of new stand-alone facilities and converted petroleum refineries.
The EIA assumes that policies, rather than market demand, drive the adoption of biomass-based diesel fuels.
Renewable diesel and biodiesel compete for the same feedstocks, so some of the projected growth in renewable diesel production displaces biodiesel production.
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