DENVER, COLORADO, US — The US biofuels industry is expected to see a period of growth and transition due to a recent surge in renewable diesel, according to a new report from CoBank’s Knowledge Exchange.
“The outlook for biofuels is favorable as the US and other leading developed countries embrace renewable liquid transportation fuels as a solution to reduce greenhouse gas emissions,” said Kenneth Scott Zuckerberg, lead grain and farm supply economist for CoBank. “Renewable diesel offers the most intriguing opportunity in the biofuels space, given the extraordinary growth potential.”
As major oil companies have begun embracing renewable diesel, US production is expected to increase exponentially. Several industry stakeholders have announced plans for new soybean crush and refinery facilities over the last two years. Soybean oil is the feedstock most commonly used for producing renewable diesel. Combined, the proposed crush and refinery projects would increase US renewable diesel production capacity six-fold by 2030 to 6.5 billion gallons annually.
However, the expected growth in soybean oil-based renewable diesel requires considerably more soybean bushels for domestic crush. CoBank estimates that US soybean acreage would need to increase by 17.9 million acres to fill the supply gap created by the additional crush and refinery projects that have been announced. Additionally, the United States would need to stop exporting whole soybeans.
Alternatives to a massive shift of acres from corn to soybeans would include growing other oilseeds like canola and sunflower on a larger scale, importing other vegetable oils, or using other feedstocks such as beef tallow to produce renewable diesel fuel.
Biofuel production has grown nearly 8% every year over the past 15 years, driven by tax credits and targeted government programs, including the federal Renewable Fuel Standard (RFS) Program and California’s Low Carbon Fuel Standard (LCFS). The Inflation Reduction Act of 2022 will increase usage of renewable energy in general, and biofuels in particular.