Renewable Diesel Projected to Turbo Charge Biofuel Growth

September 27, 2022

Key Points:

  • By producing fuel using sources with lower carbon intensity compared to traditional petroleum based products, the U.S. biofuels sector is well-positioned to play a major role in reducing greenhouse gas emissions.
  • The recently enacted Inflation Reduction Act is expected to boost biofuels by providing tax credits and funding to develop next-generation biofuels, including renewable diesel and sustainable aviation fuel.
  • While electric vehicle adoption may eventually reduce demand for ethanol – which currently dominates U.S. biofuel production – prices of lithium batteries are surging due to supply shortages. Higher battery prices will likely slow demand for EVs and extend the time frame for mass EV adoption, cushioning the rate at which EVs disintermediate ethanol fuel.
  • Driven in part by major oil companies’ embrace of renewable diesel, numerous stakeholders have announced plans for new soybean crush and refinery projects over the past two years. If these projects come to fruition, RD capacity would grow more than six-fold to 6.5 billion gallons per year by 2030.
  • The expected growth in soybean oil-based renewable diesel will require considerably more soybean bushels for domestic crush. To satisfy this demand, the U.S. would need to (theoretically) stop exporting whole soybeans while planting 17.9 million additional acres of soybeans (21% larger than the current crop) to satisfy the incremental biofuel demand.
  • Besides importing soybeans, the alternatives to shifting massive farm acreage would include growing other types of oilseeds (such as canola and sunflower) at a larger scale, importing other vegetable oils, and/or using other feedstock such as beef tallow to produce renewable diesel fuel.

Read the Report

 
 

Disclaimer: The information provided in this report is not intended to be investment, tax, or legal advice and should not be relied upon by recipients for such purposes. The information contained in this report has been compiled from what CoBank regards as reliable sources. However, CoBank does not make any representation or warranty regarding the content, and disclaims any responsibility for the information, materials, third-party opinions, and data included in this report. In no event will CoBank be liable for any decision made or actions taken by any person or persons relying on the information contained in this report.

 
 
 
 

Stay ahead of the game in your field. Subscribe today.

Get CoBank's industry-leading Knowledge Exchange research reports delivered straight to your inbox as soon as they're released.

Have a comment or question about these reports?

Contact CoBank's Knowledge Exchange team to ask questions, engage with analysts or receive additional information.