EIA: US renewable diesel capacity hits 2.6 bgy in 2022, could more than double through 2025

U.S. production capacity for renewable diesel could more than double from current levels by the end of 2025, based on several announcements for projects that are either under construction or could start development soon.

Two factors behind growing U.S. renewable diesel capacity are rising targets for state and federal renewable fuel programs and biomass-based diesel tax credits.

The Inflation Reduction Act of 2022 extended the biomass-based diesel tax credits through 2024.

The U.S. Energy Information Administration estimates U.S. renewable diesel production capacity was 170,000 barrels per day, or 2.6 billion gallons per year, at the end of 2022.

Although EIA said it expects some announced projects to be delayed or canceled, if all projects begin operations as scheduled, U.S. renewable diesel production capacity could reach 384,000 barrels per day, or 5.9 billion gallons per year, by the end of 2025.

“Renewable diesel is a fuel that is chemically equivalent to petroleum diesel and nearly identical in its performance characteristics,” EIA stated. “Renewable diesel has some of the highest greenhouse-gas (GHG) reduction scores among existing fuel pathways in programs such as the federal Renewable Fuel Standard, the California Low-Carbon Fuel Standard, the Oregon Clean Fuels Program, and the Washington State Clean Fuels Program.”

Investment in new renewable diesel production capacity has recently grown significantly in the United States because of renewable diesel’s interchangeability with petroleum diesel in existing petroleum infrastructure and because of government incentives, according to EIA.

In 2022 and early 2023, the following new renewable diesel refineries began production*:

• CVR Energy’s plant in Wynnewood, Oklahoma

• Diamond Green Diesel’s plant in Port Arthur, Texas

• HollyFrontier’s plant in Artesia, New Mexico

• HollyFrontier’s plant in Cheyenne, Wyoming

• Montana Renewables’ plant in Great Falls, Montana

• Seaboard Energy’s plant in Hugoton, Kansas

• Marathon and Neste’s joint-venture plant in Martinez, California (Phase I)

The production capacity currently scheduled to begin operation could allow renewable diesel to contribute to a greater share of West Coast diesel consumption.

Most renewable diesel in the United States has historically been consumed on the West Coast, where producers can take advantage of both RIN credits from the RFS and state credits from one of the state renewable fuel programs.

An average of 520,000 barrels per day of distillate fuel oil was consumed on the West Coast in 2021.

The region, which is also the largest renewable diesel importing region in the United States, could soon meet the majority of its distillate fuel needs from renewable diesel by 2025 if domestic renewable diesel capacity does, in fact, increase as scheduled.

*Editor’s Note: EIA claims Shell has begun producing renewable diesel in Norco, Louisiana. Biobased Diesel Daily is awaiting confirmation of this. EIA also claims New Rise Renewables in Reno, Nevada, is producing renewable diesel. While EIA stated its information in this release was based on company announcements and trade press, at least one industry outlet incorrectly reported last year that New Rise Renewables began producing renewable diesel fuel in 2022. Although an inauguration of the facility was held last summer, the announcement was not clear whether it actually started production. When Biobased Diesel Daily reached out to those involved in the project, they said renewable diesel production would not begin until early 2023. The facility is currently undergoing another possible attempt at a sale. In a Jan. 23, 2023, press release, Camber Energy stated that the facility’s capacity would be 43 mgy “once operational,” indicating that the plant is not yet running.