Analysis

Renewable diesel drives growth in 2019 biomass-based diesel imports

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In 2019, U.S. imports of biomass-based diesel, including biodiesel and renewable diesel, increased by 26 percent to more than 27.000 barrels per day (b/d), reversing three years of decline.

Imports of biomass-based diesel increased in 2019 because of the increase in renewable diesel imports from Singapore.

Biodiesel is a combination of chemical compounds known as alkyl esters and is mostly mixed with diesel petroleum in 5 percent to 20 percent or B5 to B20 blends. Renewable diesel is made of hydrocarbon chains that are indistinguishable from petroleum diesel, meaning it meets the requirements for use in current infrastructure and diesel engines and is not subject to any blending restrictions.

Biodiesel and renewable diesel are produced from a variety of fats , oils, and grease known commonly as FOGs.

Since biomass-based diesel usually costs more to produce than petroleum diesel, federal and state policy drives the biomass-based diesel consumption largely. At the federal level, diesel based on biomass qualifies as an advanced biofuel under the Renewable Fuel Standard (RFS) program of the U.S. Environmental Protection Agency which requires the blending of renewable fuels into the fuel supply of the country.

Biomass-based diesel also generates credits under the Low Carbon Fuel Standard (LCFS) in California and is increasingly being used to meet the increasing fuel standards in the LCFS due to its favorable greenhouse gas reduction score.

Most biomass-based diesel imports in 2019 originated from renewable diesel imports— that have been exclusively imported from Singapore since 2015—and increased 49 percent to a record of nearly 17.000 b/d in 2019.

All U.S. renewable diesel imports have entered the country in California since 2016, most likely for compliance with the LCFS because renewable diesel has one of the lowest carbon intensities in the approved LCFS compliance pathways.

In 2019, biodiesel imports from Canada accounted for the bulk of U.S. biodiesel imports, totaling 5.100 b/d, with the rest coming from Europe. Canadian biodiesel has been imported into the United States on a regular basis to capture U.S. tax incentives and make a contribution towards U.S. renewable fuel programs.

Although increasing targets for the Renewable Fuel Standard (RFS) have driven demand for biomass-based diesel in recent years , total imports have fallen since 2017 due to declines in imports from Argentina and Indonesia, the year that the United States imposed import duties on biomass-based diesel imports from those two countries.

In 2018 or 2019, neither Argentina nor Indonesia exported any biodiesel into the United States.

Overall, U.S. biodiesel imports in 2019 totaled more than 11.000 b/d, roughly the same level as in 2018.

The US also produces and exports biodiesel and Canada is a major trading partner. In 2019, U.S. biodiesel exports totaled 7.400 b/d, a 10 percent increase from 2018.

Canada has received almost 90 percent of U.S. biodiesel exports, much of which has been produced in the Midwest, where most U.S. biodiesel production capacity exists.

In 2019, the United States exported more biodiesel to Canada than it imported by approximately 1.500 b/d.

Nedim Husomanovic

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