US Renewable Diesel Capacity Projected to Hit 5.1 Billion Gallons per Year by 2024

by Ron Kotrba (Biobased Diesel Daily) Renewable diesel production capacity in the United States is forecast to grow from 600 million gallons per year (gpy) at the end of 2020 to 5.1 billion gpy by 2024, according to the U.S. Energy Information Administration based on projects announced and under construction. In its weekly petroleum report, EIA said growing targets for state and federal renewable fuel programs, as well as incentives, are driving the expansion.

With the challenging market conditions for traditional petroleum fuels and increasing market interest in renewable diesel production, a number of refineries have closed in the past year. Many of these facilities have announced plans to reopen as renewable diesel plants.

The significant growth in new U.S. renewable diesel production capacity has positioned domestic producers to displace imported volumes from Neste Corp. in Singapore. With its Low Carbon Fuel Standard, California has been the prime entry point for imported volumes of renewable diesel.

Based on our estimates of current proposed renewable diesel capacity expansions and existing petroleum refinery capacity, renewable diesel production capacity could represent 20 percent of total diesel production on the West Coast by 2024. In contrast, by 2024, it could represent 4 percent of total estimated diesel production capacity in the major refining complex on the Gulf Coast and 5 percent across the United States. In addition, although we expect significant capacity to be built on the Gulf Coast, we anticipate that a large portion of the Gulf Coast’s output will be consumed in California and other western states such as Oregon and Washington to meet future LCFS program targets in those areas.”

The agency noted that the primary risk to the quick expansion of renewable diesel production capacity is feedstock availability.

To date in 2021, these feedstocks have faced lower supply and higher demand, leading to sharp increases in agricultural commodity prices and prices of renewable identification number (RIN) credits for RFS compliance. RIN prices reached record highs earlier this year. Due to these high feedstock costs, to remain profitable and compete with petroleum diesel, renewable diesel and biodiesel producers have been relying heavily on incentives such as the biomass-based diesel tax credit and high tradeable credit prices for renewable diesel in the RFS and LCFS. Feedstock availability and government incentives will likely continue to play a large role in the financial viability of new renewable diesel production capacity in the near term.” READ MORE