:max_bytes(150000):strip_icc()/__opt__aboutcom__coeus__resources__content_migration__mnn__images__2018__10__biofuel_factory_fields-5b494e53c3274e7ca0db89f7740018f4.jpg "Serious oversupply looms for renewable diesel")
The boom in renewable diesel is driving U.S. production capacity far above the market for the fuel, said agricultural economist Scott Irwin of the University of Illinois on Thursday. “It’s going to be a very ugly 2024” for refiners, Irwin said during a webinar.
Renewable diesel is more expensive to produce than petroleum diesel, so sales effectively are limited to the Renewable Fuel Standard mandate of 4 to 4.5 billion gallons a year, said Irwin. Yet U.S. capacity to produce biodiesel and renewable diesel already exceeds 5 billion gallons and is expected to climb above 7 billion gallons in the near term.
“We have [an] oversupply situation, and it’s going to get worse in 2024 by a lot,” said Irwin. As a result, some plants will shut down or reduce production and some plans for new plants will be shelved.
For farmers, the boom has meant an additional $2 a bushel in soybean prices; soybean oil is a leading feedstock for renewable diesel. But global supplies are increasing, pulling down soybean prices. Renewable diesel “is not going to bail us out of that,” said Irwin.
To watch a video of the webinar, click here.
