Biofuels Are Displacing Petroleum-Based Distillate Fuel Oil Consumption on the West Coast

by Jimmy Troderman (U.S, Energy Information Administration) Last year, U.S. West Coast distillate consumption, as measured by product supplied, was at its lowest since 2002 and is on track to fall further this year. The growing use of biofuels instead of petroleum diesel is the primary cause for the decline. Renewable diesel has a growing share of the region’s diesel fuel market because clean-fuel programs have provided incentives for consuming it.

Renewable diesel and biodiesel are biofuels that can be used in place of petroleum distillate fuel oil. Distillate fuel oil is a refined petroleum product primarily used as diesel fuel in vehicles.

Renewable diesel is chemically identical to petroleum-based diesel fuel but is made using fats, oils, or greases rather than petroleum. Renewable diesel is a drop-in replacement for petroleum distillate; it can be used in diesel engines in any concentration.

Biodiesel is used the same way as renewable diesel and is made with the same feedstocks, but it’s blended (in concentrations of 20% or less) with petroleum distillate for vehicle use because it is chemically different from petroleum distillate.

Both biodiesel and renewable diesel are used to comply with the Renewable Fuel Standard (RFS), a federal program that requires transportation fuel sold in the United States to contain at least a specified minimum of renewable fuels. These biofuels are also used to meet California’s Low Carbon Fuel Standard (LCFS), Oregon’s Clean Fuels Program, and Washington’s Clean Fuels Program. These programs aim to reduce the carbon intensity of transportation fuel.

In January 2022, U.S. renewable diesel consumption surpassed biodiesel consumption for the first time and has continued to increase since then. Renewable diesel consumption has grown relative to biodiesel consumption because:

Data source: U.S. Energy Information Administration, Petroleum Supply Monthly and Monthly Energy Review
Note: Prior to 2021, we identified the green regions of the figure as adjustments rather than product supplied.

The growth in U.S. renewable diesel consumption had a more pronounced effect on West Coast distillate fuel consumption because of high biofuel consumption in California, Oregon, and Washington.

The decline in distillate fuel oil consumption in 2022 and in the first three months of 2023 is unique to the West Coast. In the rest of the United States, distillate fuel oil consumption increased, returning to pre-pandemic levels. The discrepancy in distillate fuel oil consumption between the West Coast and the rest of the United States demonstrates how much biofuel consumption has been displacing distillate fuel oil consumption on the West Coast. READ MORE

Excerpt from U.S. Energy Information Administration: California accounts for nearly all renewable diesel consumption in the United States, but most of it isn’t made in the state. More than eight times the renewable diesel was consumed in California than was produced there in 2021. Instead, most of California’s renewable diesel was produced in other states or was imported, mostly from Singapore.

Renewable diesel is a liquid biofuel that is chemically equivalent to petroleum diesel and can be used as an additive or substitute for diesel fuel in vehicles. Although renewable diesel is similar to the more common biodiesel, the fuels differ chemically and in how they are made, transported, and used. Unlike biodiesel, renewable diesel can be transported in petroleum pipelines and sold at retail stations without blending with petroleum diesel. It is often produced at existing petroleum refineries that are retrofitted to make biofuels instead of petroleum products.

California’s renewable diesel consumption grew substantially after its Low Carbon Fuel Standard (LCFS) went into effect in 2011. Between 2011 and 2021, consumption grew from 1 million barrels to 28 million barrels per year, over 18 times its original volume.

The California LCFS requires transportation fuels used in the state to be mixed with biofuels to lower their carbon intensities. California is the only state that offers a rebate to customers who purchase renewable diesel specifically, increasing renewable diesel use in the state as it becomes more economically competitive with biodiesel. Other states have various biodiesel laws and incentives.

Oregon was the only other state where renewable diesel was consumed in 2021, but it accounted for less than 1% of the U.S. total. Oregon requires petroleum diesel fuel sold in the state to be blended with either biodiesel or renewable diesel. Beginning in 2023, Washington also began requiring petroleum diesel to be blended with biodiesel or renewable diesel, but it did not report any renewable diesel consumption in 2021.

Six states—Louisiana, North Dakota, California, Wyoming, Washington, and Kansas—accounted for all renewable diesel production in the United States in 2021. Many of the plants in the other states have exclusive agreements to send all of the renewable diesel they produce to distributors in California.

Louisiana, with its substantial petroleum infrastructure, has been the state with the most renewable diesel production since 2011. More than 9 million barrels of renewable diesel was produced in Louisiana in 2021, about 46% of the U.S. total. A plant located in Norco, Louisiana, has the most renewable diesel production capacity in the United States, about 64,000 barrels per day.

U.S. renewable diesel production capacity could more than double by 2025, boosting domestic production. We expect that both renewable diesel production and consumption will continue to grow in the United States over the next few years.

You can find more information on renewable diesel as well as other biofuels in our State Energy Data System (SEDS). We recently published new renewable diesel statistics in SEDS, including annual renewable diesel production and consumption estimates by state for 2011 through 2021. Previously, we only published U.S.-level renewable diesel production and consumption data. READ MORE