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California Consumes Nearly All Renewable Diesel In The U.S.

California consumes almost all renewable diesel in the United States as demand has jumped since the state’s Low Carbon Fuel Standard went into effect in 2011, the U.S. Energy Information Administration (EIA) said on Thursday.

California was only one of two states where renewable diesel was consumed in 2021, but the other renewable diesel-consuming state, Oregon, accounted for less than 1% of total U.S. renewable diesel consumption. Oregon requires petroleum diesel fuel sold in the state to be blended with either biodiesel or renewable diesel.

Renewable diesel is made from fats and oils, such as soybean oil or canola oil, and is processed to be chemically the same as petroleum diesel. As of the beginning of 2022, there were 11 U.S. plants in 6 states with a capacity of 1,750 million gallons per year, or 114,000 barrels per day (bpd), to produce renewable diesel, according to EIA data.

In the decade to 2021, California’s diesel consumption has surged from 1 million barrels to 28 million barrels a year, over 18 times its original volume, the EIA estimates showed.

While California leads renewable diesel consumption, most of it is not being produced in the state—it is produced in other states or imported, primarily from Singapore.

Louisiana, North Dakota, California, Wyoming, Washington, and Kansas accounted for all renewable diesel production in the United States in 2021, the EIA said. And many of those plants have exclusive agreements to send all of the renewable diesel they produce to distributors in California.

U.S. production capacity for renewable diesel could more than double by the end of 2025, the EIA said earlier this year. Growing targets for state and federal renewable fuel programs and the extension of biomass-based diesel tax credits through 2024 in the Inflation Reduction Act have prompted several announcements of projects in recent months.

The EIA estimates U.S. renewable diesel production capacity was 170,000 bpd at the end of 2022.

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“Although we expect some announced projects will be delayed or canceled, if all projects begin operations as scheduled, U.S. renewable diesel production capacity could reach 384,000 b/d, or 5.9 billion gal/y, by the end of 2025,” the administration said.   

By Charles Kennedy for Oilprice.com

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