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Best of NAMA 2023












U OF ILLINOIS, USDA AG ECONOMISTS ISSUE REPORT ON LOCATION AND CAPACITY OF BIODIESEL PLANTS


by, Maria Gerveni and Scott Irwin, Department of Agricultural and Consumer Economics. University of Illinois and Todd Hubbs,
Economic Research Service, U.S. Department of Agriculture

Biodiesel production in the U.S. took off in the mid-2000s, driven by a plethora of federal and state incentives (Mattson, Wilson, and Duchsherer, 2007). Biodiesel capacity continued to expand after this initial period of explosive growth, but its potential has been threatened in recent years by the rapid buildout of renewable diesel production capacity.

The boom in renewable diesel production in the U.S. has raised numerous questions about the impact on biofuel, grain, and oilseed markets. We recently began a series on the renewable diesel boom, with the first article (farmdoc daily, February 8, 2023) comparing the production processes and characteristics of biodiesel and renewable diesel, and the second (farmdoc daily, February 15, 2023) explaining the key role that policy plays in supporting production of both biofuels. This article provides an overview of the production capacity of U.S. biodiesel plants.

Analysis

Biomass-based diesel (BBD) has long played an important role in compliance with the U.S. Renewable Fuel (RFS) mandates (e.g., farmdoc daily, July 19, 2017). The two main types of BBD fuels used to comply with the RFS mandates are "biodiesel" and "renewable diesel."

Although biodiesel and renewable diesel are produced with the same organic oil and fats feedstocks, their production process differs substantially, resulting in the creation of two fundamentally different fuels (for details see farmdoc daily, February 8, 2023). Biodiesel uses a relatively simple chemical reaction production process known as transesterification, which typically results in a compound called fatty acid methyl ester (FAME).

We refer to biodiesel in the remainder of this article as "FAME biodiesel" for this reason. Because of its chemical properties, FAME biodiesel must be blended with petroleum diesel to be used in modern diesel engines.

In contrast, renewable diesel is fully refined and cracked using petroleum refining technology. This results in a "drop-in" hydrocarbon fuel that meets the same technical specifications as petroleum diesel, and as such, can be used as a complete replacement for petroleum diesel.

We begin by reviewing the location of FAME biodiesel production facilities in the U.S. as of January 2022 in Figure 1. The data are collected as part of an annual survey of nameplate production capacity by the Energy Information Agency (EIA).

For the purposes of this survey, nameplate capacity is the amount of FAME biodiesel that a plant is capable of producing in a year, not necessarily the amount actually produced. There are currently 72 FAME biodiesel production facilities located in the United States. The total nameplate production capacity of these 72 plants is 2.3 billion gallons per year.

Plants are scattered across the U.S., with the largest concentration in the eastern half of the U.S. and the far west.



To read the entire report click here.


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