The US Renewable Diesel Production Capacity has experienced its largest monthly decrease in history
Data from the Energy Information Administration on Monday showed that the U.S. renewable-diesel production capacity decreased in July at the highest rate since the industry's rapid expansion began three years ago.
The capacity to produce biomass-based biofuels and renewable diesel, excluding biodiesel, has fallen by 299 million gallons annually from June, to 4.60 billion gallons in July. This is the second decline since the EIA started keeping records in the year 2021.
The EIA didn't immediately respond to an inquiry seeking further inputs about the reasons for the decline.
In recent years, both established oil refineries and new startups have placed large bets in renewable diesel. Government mandated consumption targets as well as subsidies that lower production costs have encouraged investment in the growth of supply. The market is experiencing a glut as the output of new plants starts to exceed demand.
Vertex Energy, the latest entrant in the U.S. renewable-diesel industry, filed for Chapter 11 protection last week. This was just a few months after the company halted production of the biofuel citing macroeconomic weaknesses.
The EIA data revealed that the demand for vegetable oils, including canola, corn and soybean oil as feedstocks for renewable diesel production fell by more than 5.6% between June and July to 1,168 billion pounds.
According to data, the demand for biodiesel feedstocks, which are blended with petroleum-based fuels to reduce emissions, increased 5.6% in July compared to June, to 866 millions pounds.
The data revealed that the demand for waste oils, greases and fats such as used cooking oil and tallow rose from 1,38 billion pounds to 1.43 billion pounds during July.
Zander Capozzola is vice president for renewable fuels, AEGIS Hedging.
Capozzola stated that renewable diesel plants would burn at least 3.162 million pounds of feedstock per month if they operated at full capacity. Biodiesel producers, on the other hand, would use another 1.288 million pounds if they ran at full capacity. (Reporting and editing by Marguerita Choy in New York)
(source: Reuters)
