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Released October 08, 2024 | SUGAR LAND
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Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--After ramping up significantly since the U.S. Energy Information Administration (EIA) began tracking renewable diesel production capacity in January of 2021, that total dropped notably between June and July of this year, according to the agency.
Industrial Info has previously noted that at least two refineries that had previously been updated from fossil fuels to renewable diesel had recently begun plans to revert back. Chevron (NYSE:CVX) (San Ramon, California) was one that is rumored to be making the change, and Vertex's Mobile, Alabama refinery is the other. Vertex has since, on September 24, filed Chapter 11 bankruptcy in a Texas court. The company hopes to negotiate a "value-maximizing sale transaction" in the process.
Subscribers to Industrial Info's Global Market Intelligence (GMI) Plant Database can read profiles on the Chevron and Vertex refineries.
Federal and state alternative fuels subsidies and mandates have helped push renewable diesel (RD) production capacity from 863 million gallons per year in January of 2021 to 4.897 billion in June 2024. In July capacity dropped to 4.598 million gallons per day, its largest month-to-month drop since EIA's recordkeeping of the fuel began.
Renewable Diesel History
What is referred to as renewable diesel is a relative newcomer to the biofuels party. Unlike ethanol for automobiles and the less-useful biodiesel, RD has only gained traction in the last three years. Its U.S. production capacity only surpassed the older biodiesel cousin in January of 2023, according to EIA figures.
In end use RD is more useful than biodiesel because the former can replace the petroleum variety 100% in end use. Biodiesel, because it contains more water, can only be mixed up to about 20% with petroleum diesel.
So while it is not a surprise that RD has grown in use over its less-useful cousin, only in California is it strongly mandated and readily available. It was January of 2024 that the California Air Resources Board (CARB) began requiring R99 or R100 in a large swath of off-road-regulated vehicles.
In fact, in July of 2023 the EIA issued a report showing that almost all RD consumed in the U.S. from 2011-2021 (99%) was used in California, with Oregon coming in a paltry second. The same report showed that the vast majority of production comes from Louisiana followed by North Dakota, California, Wyoming, Washington State and Kansas, in that order.
Imports Are Also in the Mix
Along with the above-mentioned producing states, the U.S. imported about 30,000 gallons per month of RD during the first five months of 2024, say EIA figures. That was close to the all-time monthly record high set in May of 2023, and the five-month total was 29% higher than import levels over the first five months of 2023. The agency credits increased storage capacity and a rise in production capacity from the Neste (Espoo, Finland) plant in the U.S.'s top import partner, Singapore. The plant underwent a significant expansion in 2023.
Click here to read the plant profile.
However, the EIA graph shows a drastic drop in May of this year, down to just over 20,000 gallons, which the report does not explain.
And as with domestically produced RD, California is the destination for the majority of the imports.
On July 31 of this year, CARB released first-quarter fuel consumption data showing that RD accounted for 65% of all diesel consumed in that time frame. CARB reports that 2023 was the first time the consumption of all renewable fuels, of which RD is one component, surpassed that of fossil fuels in the state, due to California's Low Carbon Fuel Standard (LCFS).
So at least in that state renewable fuels are rising in use, largely due to legislation. California is also among the few states where clearly identifiable non-petroleum diesel is readily available.
What This Means
With the rush to new U.S. production based on promises of subsidies and energy transition requirements, the current situation appears to be that supply has outstripped demand at this time. Industrial Info will continue to monitor renewable fuels refineries for any further changes in capacity, whichever direction it may go.
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) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
Industrial Info has previously noted that at least two refineries that had previously been updated from fossil fuels to renewable diesel had recently begun plans to revert back. Chevron (NYSE:CVX) (San Ramon, California) was one that is rumored to be making the change, and Vertex's Mobile, Alabama refinery is the other. Vertex has since, on September 24, filed Chapter 11 bankruptcy in a Texas court. The company hopes to negotiate a "value-maximizing sale transaction" in the process.
Subscribers to Industrial Info's Global Market Intelligence (GMI) Plant Database can read profiles on the Chevron and Vertex refineries.
Federal and state alternative fuels subsidies and mandates have helped push renewable diesel (RD) production capacity from 863 million gallons per year in January of 2021 to 4.897 billion in June 2024. In July capacity dropped to 4.598 million gallons per day, its largest month-to-month drop since EIA's recordkeeping of the fuel began.
Renewable Diesel History
What is referred to as renewable diesel is a relative newcomer to the biofuels party. Unlike ethanol for automobiles and the less-useful biodiesel, RD has only gained traction in the last three years. Its U.S. production capacity only surpassed the older biodiesel cousin in January of 2023, according to EIA figures.
In end use RD is more useful than biodiesel because the former can replace the petroleum variety 100% in end use. Biodiesel, because it contains more water, can only be mixed up to about 20% with petroleum diesel.
So while it is not a surprise that RD has grown in use over its less-useful cousin, only in California is it strongly mandated and readily available. It was January of 2024 that the California Air Resources Board (CARB) began requiring R99 or R100 in a large swath of off-road-regulated vehicles.
In fact, in July of 2023 the EIA issued a report showing that almost all RD consumed in the U.S. from 2011-2021 (99%) was used in California, with Oregon coming in a paltry second. The same report showed that the vast majority of production comes from Louisiana followed by North Dakota, California, Wyoming, Washington State and Kansas, in that order.
Imports Are Also in the Mix
Along with the above-mentioned producing states, the U.S. imported about 30,000 gallons per month of RD during the first five months of 2024, say EIA figures. That was close to the all-time monthly record high set in May of 2023, and the five-month total was 29% higher than import levels over the first five months of 2023. The agency credits increased storage capacity and a rise in production capacity from the Neste (Espoo, Finland) plant in the U.S.'s top import partner, Singapore. The plant underwent a significant expansion in 2023.
Click here to read the plant profile.
However, the EIA graph shows a drastic drop in May of this year, down to just over 20,000 gallons, which the report does not explain.
And as with domestically produced RD, California is the destination for the majority of the imports.
On July 31 of this year, CARB released first-quarter fuel consumption data showing that RD accounted for 65% of all diesel consumed in that time frame. CARB reports that 2023 was the first time the consumption of all renewable fuels, of which RD is one component, surpassed that of fossil fuels in the state, due to California's Low Carbon Fuel Standard (LCFS).
So at least in that state renewable fuels are rising in use, largely due to legislation. California is also among the few states where clearly identifiable non-petroleum diesel is readily available.
What This Means
With the rush to new U.S. production based on promises of subsidies and energy transition requirements, the current situation appears to be that supply has outstripped demand at this time. Industrial Info will continue to monitor renewable fuels refineries for any further changes in capacity, whichever direction it may go.
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) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
