Biodiesel Prices Have Been Slumping in the USA

Biodiesel prices in the USA have been flumping. The biodiesel industry is currently facing several hurdles, including a surplus in supply and a decrease in the value of renewable credits, which recently hit a three-year low. These credits are crucial as they help offset the production costs of biodiesel, which is more expensive to produce than petroleum-based diesel. 

Policy decisions further compound the challenges in the biodiesel market. For instance, President Joe Biden's administration increased the biofuel blending mandate for the nation's fuel mix over the next three years. However, the mandate for corn-based ethanol was lower than initially proposed, contributing to the decline in credit prices. These enervating market winds have necessitated businesses to carve strategic plans—for instance, Chevron's recent abnegation of operations at some of its plants. 

Chevron, the second-largest oil producer in the United States, announced the indefinite idling of two biodiesel production facilities in the Midwest, specifically in Ralston, Iowa, and Madison, Wisconsin. This decision comes in the wake of oppugnant market conditions that have impacted the profitability of biodiesel production. The facilities in question have a combined capacity of processing 50 million gallons of biodiesel annually.

This move by Chevron is significant, especially considering the company's acquisition of Renewable Energy Group for $3.15 billion in 2022. The acquisition was part of Chevron's strategy to expand renewable fuel production to 100,000 barrels per day by 2030, incorporating 10 biodiesel plants and one renewable diesel facility into its portfolio. However, the current market dynamics have turned out to be ungainly for this expansion plan. 

Amidst the overall dwindling market conditions, the production of renewable diesel, another biofuel that can be used unaltered in diesel engines, is on the rise. Renewable diesel producers generate more credits due to the fuel's lower carbon intensity score than biodiesel, making it a more attractive option in the current market.

The production of renewable diesel, another biofuel that can be used unaltered in diesel engines, is on the rise. Renewable diesel producers generate more credits due to the fuel's lower carbon intensity score than biodiesel, making it a more attractive option in the current market.

Read More About Biodiesel Production Cost Reports - Request Free Sample Copy in PDF

According to the article by Procurement Resource, the U.S. biodiesel market is facing challenges, including oversupply and declining renewable credit values, which are affecting production costs. Policy decisions and market dynamics have led players like Chevron to idle two biodiesel facilities in the Midwest. Despite acquiring Renewable Energy Group to boost renewable fuel production, the current market has impacted Chevron's expansion plans. Meanwhile, renewable diesel production is growing due to its lower carbon intensity, making it a preferable option in the biofuels market.