Released February 21, 2025 | SUGAR LAND
en
Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--Due primarily to state-level tax incentives, the production and consumption of renewable diesel doubled on the U.S. West Coast between first-quarter 2023 and November 2024, according to the U.S. Energy Information Administration (EIA). Renewable diesel can replace petroleum diesel 100% in vehicles because it is chemically identical to its older counterpart. Renewable diesel typically is produced from fats, oils or grease. So although its carbon emissions are the same as those of diesel when burned as a transportation fuel, its production process and transportation typically is less carbon intensive.
Renewable diesel's consumption is highly concentrated on the West Coast because California, Oregon and Washington have incentivized its use through energy transition programs and regulatory requirements.
Hillary Stevenson, senior director of energy market intelligence for Industrial Info, quoted Industrial Info's research showing that California has the most operational renewable diesel/sustainable aviation fuel capacity at just less than 1.8 billion gallons per year (gal/yr), or 117,000 barrels per day (BBL/d), due to the advantageous state regulatory programs. But much production comes from elsewhere in the U.S. and is shipped to California for consumption.
"Interestingly," she said, "Texas (0.7 billion gal/yr, 46,000 BBL/d) and Louisiana (just over 1 billion gal/yr, 69,000 BBL/d) together have almost as much operational capacity as California. State regulatory programs do not incentivize renewable diesel consumption in those states, but their proximity to feedstocks and land availability likely encourage TX/LA production, which is then shipped to California for consumption."
Other leading renewable diesel producers include, in descending order, North Dakota, Wyoming, Oklahoma, Kansas and Nevada.
The shipping of such fuels to California is usually by rail, tanker or barge.
Two California refineries, Marathon Petroleum Corporation's (NYSE:MPC) (Findlay, Ohio) Martinez plant and Phillips 66's (NYSE:PSX) (Houston, Texas) Rodeo plant, have added new renewable diesel capacity through converting facilities from producing diesel to renewable diesel, accounting for much of the state's production increase.
The EIA's most recent data, from November of 2024, showed West Coast renewable diesel production totaled more than 90,000 BBL/d, which is almost four times the first-quarter 2023 volume. Renewable diesel produced there accounts for about 45% of the region's consumption of the fuel. As for the rest, "Interregional rail shipments supplied about 20% of West Coast consumption, tanker or barge shipments contributed almost 25%, and the remaining demand was met through imports and inventory draws," said the EIA.
Replacing Other Distillate Fuels in California
The agency's data also show that renewable diesel's distillate fuel market share for transportation use in California was almost 65% in third-quarter 2024. That was down slightly from the 70% share in second-quarter 2024, with biodiesel making 5% of distillate fuel consumed in transportation. Biodiesel is similar, but not identical to the petroleum variety, and can only be mixed in at ratios of 5-20%.
In Oregon, biofuels' (renewable diesel and biodiesel combined) percentage of use rose throughout 2023 and peaked at about 35% in first-quarter 2024. It has dropped since then, hitting about 25% in third-quarter 2024.
Washington's biofuels percentage has risen consistently during the period, attaining about 20% of distillate fuel consumption in third-quarter 2024.
Renewable Diesel's Cost
Data from the U.S. Department of Energy (DOE) show that renewable diesel's price in California has stayed in fairly close lockstep with regular diesel prices since tracking began in 2017. Both peaked on July 1, 2022, at $6.62 per gallon for diesel and $6.51 per gallon for renewable diesel. The DOE's most recent figures, from October 1, 2024, show renewable diesel's $5.09 price to be slightly above diesel's $4.92 per gallon.
The fact that renewable diesel hugs the diesel price in California is due primarily to the state's Low Carbon Fuel Standard (LCFS) and its incentives aimed at keeping renewable diesel prices down. However, the truth is that all fuel prices tend to be higher in the state than elsewhere. This is partly because California's per-gallon fuel tax averages about three times the national average, at 96.32 cents per gallon, according to the EIA, compared to the 34.74 cents-per-gallon average across the other 49 states.
Empower.com's 2/14/25 report showed average pump prices for diesel in most states at around $3.28 (Texas) to the $3.80 range (Nevada, Maryland, Massachusetts and others). For California, it was $5.042 per gallon, more than $1 higher than the highest of other states.
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).
Renewable diesel's consumption is highly concentrated on the West Coast because California, Oregon and Washington have incentivized its use through energy transition programs and regulatory requirements.
Hillary Stevenson, senior director of energy market intelligence for Industrial Info, quoted Industrial Info's research showing that California has the most operational renewable diesel/sustainable aviation fuel capacity at just less than 1.8 billion gallons per year (gal/yr), or 117,000 barrels per day (BBL/d), due to the advantageous state regulatory programs. But much production comes from elsewhere in the U.S. and is shipped to California for consumption.
"Interestingly," she said, "Texas (0.7 billion gal/yr, 46,000 BBL/d) and Louisiana (just over 1 billion gal/yr, 69,000 BBL/d) together have almost as much operational capacity as California. State regulatory programs do not incentivize renewable diesel consumption in those states, but their proximity to feedstocks and land availability likely encourage TX/LA production, which is then shipped to California for consumption."
Other leading renewable diesel producers include, in descending order, North Dakota, Wyoming, Oklahoma, Kansas and Nevada.
The shipping of such fuels to California is usually by rail, tanker or barge.
Two California refineries, Marathon Petroleum Corporation's (NYSE:MPC) (Findlay, Ohio) Martinez plant and Phillips 66's (NYSE:PSX) (Houston, Texas) Rodeo plant, have added new renewable diesel capacity through converting facilities from producing diesel to renewable diesel, accounting for much of the state's production increase.
The EIA's most recent data, from November of 2024, showed West Coast renewable diesel production totaled more than 90,000 BBL/d, which is almost four times the first-quarter 2023 volume. Renewable diesel produced there accounts for about 45% of the region's consumption of the fuel. As for the rest, "Interregional rail shipments supplied about 20% of West Coast consumption, tanker or barge shipments contributed almost 25%, and the remaining demand was met through imports and inventory draws," said the EIA.
Replacing Other Distillate Fuels in California
The agency's data also show that renewable diesel's distillate fuel market share for transportation use in California was almost 65% in third-quarter 2024. That was down slightly from the 70% share in second-quarter 2024, with biodiesel making 5% of distillate fuel consumed in transportation. Biodiesel is similar, but not identical to the petroleum variety, and can only be mixed in at ratios of 5-20%.
In Oregon, biofuels' (renewable diesel and biodiesel combined) percentage of use rose throughout 2023 and peaked at about 35% in first-quarter 2024. It has dropped since then, hitting about 25% in third-quarter 2024.
Washington's biofuels percentage has risen consistently during the period, attaining about 20% of distillate fuel consumption in third-quarter 2024.
Renewable Diesel's Cost
Data from the U.S. Department of Energy (DOE) show that renewable diesel's price in California has stayed in fairly close lockstep with regular diesel prices since tracking began in 2017. Both peaked on July 1, 2022, at $6.62 per gallon for diesel and $6.51 per gallon for renewable diesel. The DOE's most recent figures, from October 1, 2024, show renewable diesel's $5.09 price to be slightly above diesel's $4.92 per gallon.
The fact that renewable diesel hugs the diesel price in California is due primarily to the state's Low Carbon Fuel Standard (LCFS) and its incentives aimed at keeping renewable diesel prices down. However, the truth is that all fuel prices tend to be higher in the state than elsewhere. This is partly because California's per-gallon fuel tax averages about three times the national average, at 96.32 cents per gallon, according to the EIA, compared to the 34.74 cents-per-gallon average across the other 49 states.
Empower.com's 2/14/25 report showed average pump prices for diesel in most states at around $3.28 (Texas) to the $3.80 range (Nevada, Maryland, Massachusetts and others). For California, it was $5.042 per gallon, more than $1 higher than the highest of other states.
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).
