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Domestic Renewable Diesel Capacity Could Double in 2 Years
USAgNet - 02/07/2023

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. We estimate U.S. renewable diesel production capacity was 170,000 barrels per day (b/d), or 2.6 billion gallons per year (gal/y), at the end of 2022. 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.

Renewable diesel is a fuel that is chemically equivalent to petroleum diesel and nearly identical in its performance characteristics. The same is not true of biodiesel, which is chemically different from petroleum diesel. Renewable diesel’s chemical equivalence to petroleum diesel gives it a couple of advantages over biodiesel. One advantage is that producers can distribute renewable diesel in petroleum diesel pipelines. A second advantage is that traditional diesel engines can consume any blend level of renewable diesel, including pure renewable diesel, with no significant side effects. In contrast, biodiesel can only be blended into petroleum diesel between 2% and 20% of the diesel fuel by volume.

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 (RFS), the California Low-Carbon Fuel Standard (LCFS), the Oregon Clean Fuels Program, and the Washington State Clean Fuels Program.

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