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Released May 16, 2022 | SUGAR LAND
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Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--Because the U.S. is one of the top exporters of soybeans and soybean products, the land-for-food-versus-fuel debate has an international dimension. This is much like oil and gas markets--the fuels that soy-based biofuels are aiming to replace someday.
The U.S. Energy Information Administration (EIA) expects renewable diesel refinery capacity to increase to 130,000 barrels per day (BBL/d) by 2030, compared with its 90,000-BBL/d capacity in 2020, while biodiesel capacity drops only slightly during that time. Experts believe the U.S. will need to add 12 million acres of soybeans to fill that demand. It is not likely that this acreage would be available without robbing from food supplies or possibly corn, another biofuels/food source.
Industrial Info is tracking more than 60 renewable diesel and biodiesel capacity projects in the U.S., worth more than $23 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Alternative Fuels Project Database can click here for detailed project reports.
Click on the image at right for a chart showing U.S. renewable diesel and biodiesel project spending by type.
In 2020, the U.S. and Brazil were the top two soybean exporters (accounting for 44.3% and 40.1% of all exports, respectively) by orders of magnitude over Argentina (3.6%), Paraguay (3.3%) and Canada (3.0%). For the U.S., by far the top recipient of the nation's soybeans is China (14.15 million metric tons), which in 2021 received well over half of U.S. soybean exports, with the U.K. a speck-in-the-distance second (1.94 million metric tons).
The 2017-18 tariff war with China hurt U.S. exports to that county somewhat, especially by lowering the per-bushel price, but by 2021 the numbers had rebounded to near-pre-tariff-war levels, says University of California, Davis' Aaron Smith. Smith is DeLoach Professor of Agricultural Economics in the school's Department of Agricultural and Resource Economics. He said, "Soybean exports have now recovered from the trade war. Last year, they reached pre-trade-war levels. This year, they are running slightly behind that pace."
Most of the countries that import U.S. soybeans use them for food, so if exports were shifted to green diesel production, food availability might not be affected here, but it likely would be in China and elsewhere. However, China would likely first turn to Brazil to replace U.S. supplies, as it did during the tariff war.
The U.S. Department of Agriculture (USDA) reports that the U.S. soybean yield in 2021 was 51.4 bushels per acre (bpa), up 7% from the 2020 average. Total soybean production for 2021 was 4.44 billion bushels, up 5% from 2020.
The agency also estimates that 32% of green diesel comes from soy, with the rest coming from animal fats and other waste sources.
If all exports were converted to the green diesel spectrum, would there be enough to meet expected demand?
No, say some experts. Some have estimated an eventual need for tens of millions more acres in soybeans to meet expected demand, which would cut into corn crops for ethanol and even food.
But even if exports were converted to domestic green diesel, there's another issue that arises. When soybeans are processed, or crushed in the industry vernacular, two things come out: oil and meal. For meal, 98% of it is used to produce animal feeds, and less than 1% goes to human food. Switching to domestic use for soybean oil would have the side effect of creating a massive supply of soy meal to be exported. But here is another product for which there is a finite market. The U.S. is currently the third-largest soybean meal exporter, after Argentina and Brazil. So at least one of those countries would have to be convinced to increase soybean exports at the expense of soybean meal.
The Big Dilemma
The idea of "Let's just grow more soybeans and we can cut our CO2 emissions" is much more complicated than that. Even if refiners could indeed meet the expected increases in demand, it still would only supply a tiny percentage of U.S. diesel fuel needs. Currently, most of the green diesel spectrum fuels go to California because of the state's low carbon fuel standard (LCFS) incentives. Other states are looking at adding LCFS's of their own, but none are nearly as large or populous as the Golden State, so even then most biofuels will go to California.
So is this hopeless? There are challenges, but as with so many requirements, science is looking at other alternatives. In our next installment we will look at the development of more energy-rich feedstock plants that can grow in the off season.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
The U.S. Energy Information Administration (EIA) expects renewable diesel refinery capacity to increase to 130,000 barrels per day (BBL/d) by 2030, compared with its 90,000-BBL/d capacity in 2020, while biodiesel capacity drops only slightly during that time. Experts believe the U.S. will need to add 12 million acres of soybeans to fill that demand. It is not likely that this acreage would be available without robbing from food supplies or possibly corn, another biofuels/food source.
Industrial Info is tracking more than 60 renewable diesel and biodiesel capacity projects in the U.S., worth more than $23 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Alternative Fuels Project Database can click here for detailed project reports.
In 2020, the U.S. and Brazil were the top two soybean exporters (accounting for 44.3% and 40.1% of all exports, respectively) by orders of magnitude over Argentina (3.6%), Paraguay (3.3%) and Canada (3.0%). For the U.S., by far the top recipient of the nation's soybeans is China (14.15 million metric tons), which in 2021 received well over half of U.S. soybean exports, with the U.K. a speck-in-the-distance second (1.94 million metric tons).
The 2017-18 tariff war with China hurt U.S. exports to that county somewhat, especially by lowering the per-bushel price, but by 2021 the numbers had rebounded to near-pre-tariff-war levels, says University of California, Davis' Aaron Smith. Smith is DeLoach Professor of Agricultural Economics in the school's Department of Agricultural and Resource Economics. He said, "Soybean exports have now recovered from the trade war. Last year, they reached pre-trade-war levels. This year, they are running slightly behind that pace."
Most of the countries that import U.S. soybeans use them for food, so if exports were shifted to green diesel production, food availability might not be affected here, but it likely would be in China and elsewhere. However, China would likely first turn to Brazil to replace U.S. supplies, as it did during the tariff war.
The U.S. Department of Agriculture (USDA) reports that the U.S. soybean yield in 2021 was 51.4 bushels per acre (bpa), up 7% from the 2020 average. Total soybean production for 2021 was 4.44 billion bushels, up 5% from 2020.
The agency also estimates that 32% of green diesel comes from soy, with the rest coming from animal fats and other waste sources.
If all exports were converted to the green diesel spectrum, would there be enough to meet expected demand?
No, say some experts. Some have estimated an eventual need for tens of millions more acres in soybeans to meet expected demand, which would cut into corn crops for ethanol and even food.
But even if exports were converted to domestic green diesel, there's another issue that arises. When soybeans are processed, or crushed in the industry vernacular, two things come out: oil and meal. For meal, 98% of it is used to produce animal feeds, and less than 1% goes to human food. Switching to domestic use for soybean oil would have the side effect of creating a massive supply of soy meal to be exported. But here is another product for which there is a finite market. The U.S. is currently the third-largest soybean meal exporter, after Argentina and Brazil. So at least one of those countries would have to be convinced to increase soybean exports at the expense of soybean meal.
The Big Dilemma
The idea of "Let's just grow more soybeans and we can cut our CO2 emissions" is much more complicated than that. Even if refiners could indeed meet the expected increases in demand, it still would only supply a tiny percentage of U.S. diesel fuel needs. Currently, most of the green diesel spectrum fuels go to California because of the state's low carbon fuel standard (LCFS) incentives. Other states are looking at adding LCFS's of their own, but none are nearly as large or populous as the Golden State, so even then most biofuels will go to California.
So is this hopeless? There are challenges, but as with so many requirements, science is looking at other alternatives. In our next installment we will look at the development of more energy-rich feedstock plants that can grow in the off season.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
