Louisiana Could Supplant California as SAF Leader

by Curt Epstein (Aviation International News) While California has been the hotbed for renewable fuel production in the U.S., Louisiana is poised to knock it off the throne. Shift could come as the state's tax incentives change -- A new report from energy market intelligence provider Industrial Info Resources argues that Louisiana, which has long been a leader in fossil fuel production, could soon outpace California as the leader in renewable fuel production in the U.S.

According to the company’s data, Louisiana currently trails the Golden State in terms of renewable diesel and sustainable aviation fuel (SAF), which both share similar production processes. While Louisiana has a capacity of 1.3 billion gallons a year, compared to California’s 1.75 billion, the Bayou State’s planned production projects would outstrip the latter’s, bumping it up to more than 3.2 billion gallons annually, while the projected additional capacity in California would bring it to just less than 2 billion gallons.

One factor in the shift could be Louisiana’s increase in permitting for carbon capture, usage, and storage (CCSU) wells. In 2023, the state’s Department of Energy and Natural Resources was given permission to process and issue permits for CCUS wells, which allow deep sequestration of carbon dioxide, instead of the U.S. Environmental Protection Agency.

“The state has many types of secure geologic formations for storage, so that's a great start,” said Hillary Stevenson, Industrial Info's v-p of energy intelligence. “It has oil and gas fields which could benefit from enhanced oil recovery (EOR) carbon sequestration and other industries that could utilize captured carbon dioxide.”

Another factor is the status of clean fuel production credits under Section 45Z of the U.S. Tax Code, which spurred industry growth in California and other states, in conjunction with local tax incentives. READ MORE

Excerpt from Industrial Info Resources News Intelligence: For decades Louisiana has been among the U.S. leaders in production of oil and natural gas. Now, it is gaining traction in the production of environmentally friendly renewable diesel (RD) and sustainable aviation fuel (SAF).

Industrial Info's Vice President of Energy Intelligence Hillary Stevenson muses that the reason for the latter could be that the state is also second in permitting of Class VI wells used for carbon capture, usage and storage (CCUS) permitting.

One question Stevenson asks: Why is Louisiana suddenly jumping ahead of California, the state known for its leadership in the energy transition in all sectors? One answer could be that clean fuel production credits under Section 45Z of the U.S. Tax Code are due to expire in 2029. So, RD and SAF producers must look elsewhere after that.

That would be to 45Q incentives (also under the U.S. Tax Code) for employing CCUS in production; these tax breaks that continue for 12 years, as long as they are in place by 2033. And in December 2023, Louisiana received what's known as "Class VI primacy," allowing the Louisiana Department of Energy and Natural Resources (LDENR) to process and issue permits for CCUS wells, which allow deep sequestration of carbon dioxide (CO2), instead of the U.S. Environmental Protection Agency (EPA).

Louisiana joined five other states in its ability to expedite permitting within its borders by removing them from the EPA's significant backlog in processing. Texas, which leads Industrial Info's list of CCUS projects, is among the six total, but California is not.

Late in June, carbon-negative power producer Strategic Biofuels announced the LDENR had issued the company the state's first Class VI permit for multiple wells. It will "significantly advance the company's Louisiana Green Fuels (LGF) project in Caldwell Parish," the company said in a press release.

Industrial Info Resources is tracking Strategic Biofuels' two fuel projects with which the wells are associated. Industrial Info Resources offers more information on these projects in its Global Market Intelligence (GMI) Alternative Fuel Project Database, where readers can find details--including construction schedules, investment values and necessary equipment--in detailed reports for the renewable fuels plant and renewable diesel plant.

The release added, "It provides sufficient permanent storage capacity for the CO2 associated with up to 600 MW of carbon-negative electric power generation."

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news, and analysis on the industrial process, manufacturing, and energy-related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified, and verified plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD). READ MORE