Tremendous growth in the biomass-based diesel industry should be celebrated by producers and farmers, as well as those who enjoy breathing cleaner air and lower greenhouse gas emissions. However, that growth coupled with disappointing Renewable Fuel Standard volumes set by the U.S. Environmental Protection Agency have put stress on the industry. Despite the current storm created by these conditions, new markets rapidly coming online provide a sunnier outlook for the years ahead.

In 2023, biomass-based diesel (BBD) consumption reached just under 4.6 billion gallons. Out of total diesel fuel consumed in the United States in 2023, BBD accounted for around 8%, a significant growth from recent years (approx. 5.5% in 2022). The U.S. Energy Information Agency’s most recent data, which is current through February, shows biodiesel production capacity has remained relatively steady at 2.1 billion gallons per year (BGY), while renewable diesel capacity has expanded up to 3.9 BGY (from 2.2 BGY as recent as October 2022). The main driver for this growth continues to be states with a Low Carbon Fuel Standard. California’s market remains strong, with consumption making up approximately 60% of its entire diesel pool.

Looking forward, renewable diesel capacity expansions and greenfield projects are continuing well into 2024 and parts of 2025. Currently, around 1.65 BGY of renewable diesel production capacity is expected by the end of 2025 in the U.S., with an additional 300 million gallons per year (MMgy) sanctioned in Canada. Sustainable aviation fuel (SAF) projects also continue apace, with an approximate 600 MMgy of production capacity expected by the end of 2025, with the majority of near-term growth coming from the familiar hydroprocessed esters and fatty acids (HEFA) production pathway.

This unprecedented growth eclipsed what the EPA forecasted, greatly exceeding the set rule for 2023. When the set rule was released in June 2023, it was readily apparent that BBD would easily outpace the D4 volume.

LCFS credit prices across the West Coast are also down from recent highs. Recently, there has been huge growth in credit generation, led by BBD, renewable natural gas and electrical vehicle adoption. Looking at the California LCFS, there is currently over 23 million metric tons of LCFS credits in the California credit bank. This is significantly pulling LCFS credit prices down. This is not only occurring in California but in all LCFS states, just not to the same degree.

Although these lower credit prices are concerning for producers, there is reason for hope with growing demand. New markets have been developing in recent years, due to many corporate initiatives to reduce greenhouse gas emissions and lower their collective carbon footprint. Both the rail and maritime industries are primed and ready to begin their transition to lower-carbon fuel sources. Both biodiesel and renewable diesel fit perfectly into their corporate structures, as they can be used as drop-in fuels.

An estimated 80% of the world’s goods are transported by sea, making low-carbon fuel critical for corporations that have made aggressive carbon reduction commitments. Biodiesel sales in marine markets are growing rapidly throughout the world, with B24 blends being sold in high quantities in Singapore and high quantities of B30 blends being sold in northwest Europe.

These companies would like to increase their uptake in biodiesel and renewable diesel blends in the U.S., a 7-billion-gallon market, but there are some hurdles—namely, the inability for ocean-going vessels to get the benefits of renewable identification numbers (RINs). Reps. Mariannette Miller-Meeks, R-Iowa, and John Garamendi, D-California, have introduced legislation aiming to increase the use of renewable biofuels used by sea vessels. By designating renewable fuel used in ocean-going vessels as an “additional renewable fuel” under the RFS, the Renewable Fuel for Ocean-Going Vessels Act would enable companies to preserve RINs in the program. U.S. Sens. Pete Ricketts, R-Nebraska, and Sherrod Brown, D-Ohio, introduced a similar version of the bill in the Senate, and thus far, the bill has shown signs of bipartisan support.

Railroads are another difficult-to-decarbonize sector with dreams of a cleaner future. The rail market is 4 billion gallons in the U.S., and we project that more than 20% will be BBD before the end of the decade. Multiple Class I railroad companies have been setting lofty goals for biodiesel use in their engines as early as 2030. Union Pacific, BNSF and Canadian National, along with other Class I railroads, are already making strides, successfully testing up to 100% BBD.

While there are near-term headwinds for our industry as discussed above, long-term tailwinds are right around the corner. Demand for BBD fuel is going to continue to grow as existing markets expand, and the benefits of these fuels continue to reach new markets.

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JEFFERSON CITY, MO – A recent Life Cycle Assessment conducted by Sustainable Solutions Corporation (SSC) for the United Soybean Board (USB) and the National Oilseed Processors Association (NOPA) reveals a significant reduction in the carbon footprint of U.S. Soy throughout its cultivation, harvesting, transportation and processing stages. The assessment highlights a notable 22% decrease in the carbon footprint associated with U.S. production of crude soy oil, which is a key feedstock for U.S. biodiesel, renewable diesel and SAF producers.

Soybean production and oil processing constitute more than 40% of the carbon intensity (CI) score for soy biodiesel. The improvements documented in this report are expected to translate into reductions in CI across the clean fuels industry.

Clean Fuels Alliance America assisted USB and NOPA in ensuring the data collected for processors in the report aligns with data specifications for GREET, so it could be easily integrated into GREET model updates.

“We look forward to working with Argonne National Laboratory through the data quality assessment process to update the GREET model to reflect the latest improvements in the industry,” said Veronica Bradley, Environmental Scientist at Clean Fuels Alliance America.

The Life Cycle Assessment of U.S. Soybeans, Soybean Meal, and Soy Oil report can be found here.

Materials supported by the United Soybean Board, soybean farmers and their checkoffs.

About United Soybean Board (USB): United Soybean Board’s 77 volunteer farmer-leaders work on behalf of all U.S. soybean farmers to achieve maximum value for their soy checkoff investments. These volunteers create value by investing in research, education and promotion with the vision to deliver sustainable soy solutions to every life, every day across the three priority areas of Infrastructure & Connectivity, Health & Nutrition, and Innovation & Technology. As stipulated in the federal Soybean Promotion, Research and Consumer Information Act, the USDA Agricultural Marketing Service has oversight responsibilities for USB and the soy checkoff. For more information on USB, visit unitedsoybean.org.

About National Oilseed Processors Association (NOPA): Founded in 1930, NOPA is the national trade organization located in Washington, DC representing the U.S. soybean, canola, flaxseed, safflower seed, and sunflower seed crushing industries. Our 15 members operate a total of 62 soybean & 5 softseed solvent extraction plants across 21 states. NOPA members produce meal and oil used in human food, animal feed, fuel and for industrial applications. Collectively, NOPA members process 95 percent of all soybeans in the U.S. which accounts to over 2 billion bushels annually. For more information on NOPA, visit nopa.org.  

Contact: Heather Buechter, hbuechter@cleanfuels.org.

The post New Assessment Shows Value of Soybean Oil as Low-Carbon Feedstock for Clean Fuels appeared first on Clean Fuels Alliance America.

Prior to joining Clean Fuels Alliance America, Jonathan was an Economist at Marathon Petroleum Corporation, where he led economic and market analyses and forecasts in the oil and gas market. Jonathan has also worked both in process engineering and environmental compliance between multiple refineries within Marathon’s portfolio. He has a Bachelor of Science in Chemical Engineering from Rose-Hulman Institute of Technology.

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