U.S. Renewable Diesel Production Exceeds Biodiesel Production Capacity In 2023: EIA

U.S. production capacity of renewable diesel and other biofuels reached 3 billion gallons per year in January 2023, exceeding the production capacity for U.S. biodiesel for the first time, according to the U.S. Energy Information Administration. The growth in production capacity of renewable diesel and other biofuels can be attributed to increasing targets for state and federal renewable fuel programs and the renewal of biomass based tax credits.

Financing in innovative renewable diesel production capability has increased significantly across the U.S. because of renewable diesel’s compatibility with petroleum diesel in current petroleum infrastructure and because of government incentives. Moreover, the $1 per gallon biodiesel income tax credit has been extended until Dec. 31, 2024.

Renewable diesel and other biofuels production capacity has risen threefold in the U.S., while biodiesel capacity has declined by 13 percent, since 2021. As it stands, overall biofuels production capacity – renewable diesel, biodiesel, ethanol, and other biofuels – rose six percent in January 2023, compared to January 2022. Majority of the production comes from fuel ethanol, which accounted for 78 percent of capacity. Renewable diesel and other biofuels accounted for 13 percent, and biodiesel accounted for nine percent.

The U.S. production capacity for producing renewable diesel and other biofuels rose by 71 percent in January 2023, compared to January 2022. Moreover, 11 states reported sites with renewable diesel in January 2023, compared to six in 2022. Texas, in particular, has undergone a significant transition and in January 2023 produced 537 million gallons per year, having had no renewable diesel and other biofuels capacity in January 2022.

Biodiesel consists of the smallest share of U.S. biofuels capacity and declined by 169 billion gallons per year in January 2023, compared to January 2022. Producers in the Midwest, predominantly in Iowa, Missouri, Illinois and Indiana continue to hold a large share of the U.S. biofuels market.