Slump Strikes U.S. Biodiesel and Renewable Diesel in 2014

---

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - Imports of biodiesel and renewable diesel in the U.S. fell dramatically last year because of uncertainty over Renewable Fuel Standard (RFS) targets and lower-than-expected Argentinian imports.

After a record year in 2013, imports of biomass-based diesel (which includes both biodiesel and renewable diesel) in 2014 fell 36%, to 333 million gallons. The Energy Information Administration (EIA) blamed uncertainty in setting targets for the RFS, which is designed to encourage the production and consumption of renewable fuels. Targets for 2014 were not finalised and those for 2015 have not been proposed yet. Alongside this, the unexpected surge of biodiesel imports from Argentina in 2013 as a result of European Union (E.U.) anti-dumping duties placed on Argentina's biodiesel, failed to happen last year.

Biodiesel and renewable diesel fuels are produced from refining vegetable oils or animal fats. Biodiesel is blended with petroleum diesel up to 5% or 20% by volume (referred to as B5 and B20, respectively). Renewable diesel is a diesel-like fuel that meets specifications for use in existing infrastructure and diesel engines, and thus is not subject to any blending limitations.

"The strongest drivers of the resurgence in U.S. biomass-based diesel demand since 2012 have been increasing RFS targets and the on-again, off-again biodiesel tax credit," the EIA stated in its Petroleum Supply Monthly report. "Biodiesel and renewable diesel are valuable because they qualify for the two major renewable fuel programs in the United States: the RFS applied at the national level, and California's Low Carbon Fuel Standard (LCFS). Biomass-based diesel fuels have additional advantages over other renewable fuels because of their relatively high energy content and low carbon intensity, which allow them to qualify for higher credit values in both renewable fuel programs."

In 2013, the E.U.'s actions diverted large volumes of Argentine biomass-based diesel bound for Europe - its largest market -- to the U.S. However, in 2014, U.S. imports of biodiesel from Argentina fell by 57% to 52 million gallons.

Biomass-based diesel imports were also hit by the expiration of the $1.00 per gallon biodiesel tax credit at the end of 2013. Despite being restored retroactively at the end of 2014, it is believed to impacted the production levels of biomass-based fuel makers.

Last year, of the 212 million gallons of biodiesel imported into the U.S., 47% came from Canada, which reclaimed its number one spot after Argentina's surge in 2013. The rest came mostly from Indonesia and Argentina. Renewable diesel imports last year reached 121 million gallons in 2013, down 42% from 2013. Just over 92% of that total came from Singapore and entered the U.S. primarily through West Coast ports, likely destined for California LCFS compliance.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. To contact an office in your area, visit the Industrial Info "Contact Us" page.