Holding Strong: U.S. Biodiesel Producers Surveyed

by Tom Bryan (Biodiesel Magazine) Biodiesel Magazine’s late-2020 survey of producers tells the story of a resilient, changing industry that’s taken mostly indirect hits from the pandemic. Many producers lowered, but later ramped back up, production in 2020.

This publication’s survey of U.S. biomass-based diesel producers, conducted in early December, captured responses from qualified personnel at about one-fifth of the industry’s operational facilities. While the number of plants represented in the survey offers a limited picture of the industry and its fleet of 100-plus plants, the sample includes both biodiesel and renewable diesel facilities. In fact, 19% of survey respondents specified some form of involvement with renewable diesel production in 2020, including one facility that produces both renewable diesel and sustainable aviation fuel (SAF). Every respondent was either a biodiesel producer exclusively, or a producer of both biodiesel and renewable diesel/SAF.

Most respondents with a stated involvement in renewable diesel production were biodiesel plants involved with aggregating or pretreating feedstock for renewable diesel or SAF, not actual renewable diesel plants. In addition to those currently supplying feedstock to renewable diesel producers, several other respondents said they anticipate doing so in the future. This is notable, as a number of U.S. biodiesel plants are, or will soon be, supplying all or some of their product stream as ready-made feedstock for renewable diesel production. In July, for example, Marathon Petroleum Corp. purchased the 50 MMgy Duonix biodiesel plant in Beatrice, Nebraska, with the intention of using the facility to aggregate and pretreat feedstock for renewable diesel production in Dickinson, North Dakota. Other producers are expected to follow suit.

That industry’s trend toward feedstock diversity may ultimately hit a wall, however, as the biodiesel and renewable diesel industry grows rapidly over the next several years. The U.S. biodiesel industry currently has the capacity to produce 2.8 billion gallons annually, with planned and proposed expansions (predominantly renewable diesel) potentially adding another 5.5 billion gallons of capacity by 2024, according to our page-20 feature, “Renewable Diesel's Rising Tide.”

The NBB, in fact, has a stated vision for the industry to exceed not only 6 billion gallons, but 15 billion gallons by 2050. The organization believes this will be made possible by increased soybean production—driven by the world’s rising demand for protein—which is expected to result in massive amounts of excess soy oil (as much as 5.5 billion pounds more by 2030) becoming available for biodiesel and renewable diesel production.

What have historically been lower-cost, lower-quality feedstocks such as used cooking oil (UCO) and distillers corn oil (DCO) have risen in value during the pandemic due to restaurants (UCO suppliers) and ethanol plants (DCO suppliers) shutting or slowing down. DCO production, however, returned to near-normal levels later in 2020, after dropping by more than 50% earlier in the year. Rendering plants, too, were impacted by COVID-19, with the supply of animal fats being cut in half during the onset of the pandemic. Soybean crush levels have actually increased, but pricing has been volatile.

In fact, three-fourths of survey respondents lowered their production during the pandemic.

It’s been widely reported that a number of U.S. biodiesel producers supplied glycerin to hand sanitizer manufacturers during the pandemic and, in fact, nearly 62% of survey respondents said they had.

Generally, survey respondents believed that the Biden Administration will be more “climate focused” and, therefore, more friendly to low-carbon, renewable fuels like biodiesel and renewable diesel.
“This was a very important election,” one respondent said. “We need a president who is mindful of the effects of climate change but also understands the benefits of using biomass-based diesels to reduce GHG, immediately.”

Another said, “Electing politicians that have favorable opinions of renewable fuels is essential to the long-term growth of our industry.”
Others said having a Democrat in office “will advance carbon reduction policies and reduce the likelihood of EPA granting small refinery exemptions (SREs);” and that the Biden Administration poses “less risk” to the biofuels sector.

The EPA’s granting of SREs—and the impact of those actions on RIN values—was echoed by several respondents, as was the importance of fighting for the continuance of the biodiesel tax credit over the next 24 months.

“Our industry still requires some combination of RINs, the BTC, and/or LCFS to be competitive with fossil fuels,” said another.

“We need a more robust RFS and additional clarity on the blender credit program past 2022,” another producer said. “We have already lost 2020 due to COVID and the late return of retroactive BTC payments.”

Other respondents were less specific about the industry’s policy priorities, and more uncertain about the Biden administration. The impact of the new administration on the biodiesel industry will be “neutral,” one respondent said, echoing the sentiment of another who said the impact of the changeover would likely do “nothing” for the industry. One producer said, “I personally think both parties have shown support for renewable energy. So, in regards to the future of the industry, I don't see the election having a large effect either way.”

Beyond the results of the election, the concerns of respondents were predominately related to upholding the integrity of the RFS and assuring the continuance of the BTC past 2022. READ MORE