EIA: US biomass-based diesel imports increase 65%, set new record in 2016
US imports of biomass-based diesel, which include biodiesel and renewable diesel, increased by 65% in 2016 to reach a record level of 916 MMgal. Increasing Renewable Fuel Standard (RFS) targets and the recently expired biodiesel blender’s tax credit were strong drivers of biomass-based diesel demand in 2016, incentivizing increased levels of imports of both biodiesel and renewable diesel. The biodiesel blender’s tax credit has expired several times in the past, most recently expiring at the end of 2014, only to be retroactively reinstated.
Biodiesel and renewable diesel are valuable because they qualify for the two major renewable fuel programs in the United States: the nationwide RFS and California’s Low Carbon Fuel Standard (LCFS). Biomass-based diesel fuels have additional advantages over other renewable fuels such as fuel ethanol because of their relatively high energy content and low carbon intensity, which allow them to qualify for higher credit values in both renewable fuel programs.
Both biodiesel and renewable diesel fuels are produced from refining vegetable oils or animal fats. Biodiesel is blended with petroleum diesel up to 5% or 20% by volume (referred to as B5 and B20, respectively). Renewable diesel is a drop-in fuel—meaning that it meets specifications for use in existing infrastructure and diesel engines—and is not subject to any blending limitations.
US imports of biodiesel, which totaled 353 MMgal in 2015, nearly doubled in 2016 to reach a record-high 693 MMgal. More than half of US imports of biodiesel originated from Argentina (64%), with much of the rest coming from Indonesia (15%) and Canada (14%). Roughly half (53%) of biodiesel imports arrived along the Atlantic Coast because of the favorable economics of importing seaborne cargoes to that region relative to the movement of domestically produced product by rail from the Midwest. On a monthly basis, biodiesel imports exceeded 100 MMgal for the first time in December 2016. The five largest volumes for monthly biodiesel imports occurred during the second half of 2016, ahead of the expiration of the $1/gallon biodiesel blender’s tax credit.
Imports of renewable diesel increased 9% from 2015 levels to reach 223 MMgal in 2016. Similar to 2015, Singapore was the only source of imported renewable diesel, which was primarily destined for the West Coast, most likely for compliance with California's LCFS program. Given the way lifecycle greenhouse gas emissions are calculated for compliance in California’s LFCS, renewable diesel is one of the most valuable renewable fuels for generating LCFS credits, which has encouraged its import into the region in recent years.
EIA’s most recent Short-Term Energy Outlook projects biomass-based diesel imports to remain largely flat in 2017 because of the expiration of the blender’s tax credit, before increasing in 2018 as a result of increasing RFS targets. Net imports of biomass-based diesel (imports minus exports) are expected to remain largely unchanged at roughly 800 MMgal in 2017, accounting for approximately one-third of total US biomass-based diesel consumption in 2007, before increasing to around 900 MMgal in 2018.
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