Renewable Diesel Capacity To Grow

U.S. renewable diesel production will grow significantly due to incentives provided by environmental legislation both at the federal and state levels. The U.S. Environmental Protection Agency has implemented the Renewable Fuel Standard (RFS) to reduce greenhouse gas emissions by supporting the economics of renewables through tax credits.   State regulations such as the Low Carbon Fuel Standard (LCFS) in California set specific reduction targets for carbon intensity.   California is one of the largest U.S. markets for renewable diesel, with Oregon and Washington implementing similar legislative incentives.

Renewable diesel is produced from animal fat, vegetable oils, and grease wastes, and has a higher energy content with less engine emissions compared to petroleum-based diesel.  It can be a direct replacement without requiring modifications to existing engines and can be distributed using existing diesel distribution infrastructure from manufacturing facilities to market networks.

In 2019, U.S. renewable diesel capacity was around 25,000 barrels per day and is expected to grow to 170,000 barrels per day over the next five years.  Significant projects are currently in progress and new projects have recently been announced to modify existing oil refineries for renewable diesel production.  In addition to utilizing the sophisticated hydroprocessing assets, other existing plant systems (logistics, utilities, tankage, pipelines, effluent handling) are utilized for maximum economic return.