According to the U.S. Energy Information Administration, the West Coast’s increasing demand for renewable diesel and biodiesel fuels is set to push petroleum diesel usage to its lowest point in over ten years.
From January to April 2021, diesel consumption (specifically distillate fuel oil) in California, Washington, and Oregon plummeted to around 400,000 barrels per day. Distillate fuel oil is a refined petroleum product primarily used as diesel fuel.
This year’s diesel usage is currently 18% lower than the previous year’s average and a significant drop from the 450,000 barrels per day recorded in 2000.
The West Coast’s drive towards renewable energy sources is reshaping the region’s fuel landscape, signaling a monumental shift away from traditional diesel and towards sustainable alternatives.
“Last year, U.S. West Coast distillate [diesel] consumption, as measured by product supplied, was at its lowest since 2002 and is on track to fall further this year. The growing use of biofuels instead of petroleum diesel is the primary cause for the decline,” EIA, an arm of the U.S. Department of Energy, noted July 10.
Biofuels, such as biodiesel and renewable diesel, are emerging as viable alternatives to traditional diesel and are playing a crucial role in meeting emission requirements set by California, Oregon, and Washington. However, according to the Energy Information Administration (EIA), the rest of the country is experiencing a rise in diesel consumption back to pre-pandemic levels.
The EIA highlights that renewable diesel is gaining traction in the diesel fuel market on the West Coast due to the incentives provided by clean-fuel programs. In fact, California consumes almost all of the renewable diesel produced in the United States.
Both renewable diesel and biodiesel can replace traditional diesel fuel. Renewable diesel, which has the same chemical composition as petroleum-based diesel, is made from fats, vegetable oils, or greases. On the other hand, biodiesel, while derived from the same feedstocks, is chemically different and blended with diesel.
According to the EIA, renewable diesel has outpaced biodiesel in usage since January 2022. This is because renewable diesel can be blended in any concentration and performs better in cold temperatures compared to biodiesel. Additionally, renewable diesel can be transported through existing petroleum diesel pipelines, and petroleum refineries can be converted to produce larger quantities of renewable diesel.
The total number of biofuel stations in the United States is 1,885, comprising 1,312 biodiesel stations and 573 renewable diesel stations, as per the EIA data. California leads with 570 renewable diesel stations and 45 biodiesel stations. Meanwhile, Washington has 21 biodiesel stations and no renewable diesel stations, whereas Oregon has 31 biodiesel stations and only three for renewable diesel.
Overall, the shift towards biofuels is gaining momentum, especially on the West Coast, where incentives and advancements in renewable diesel are driving the transition away from traditional diesel.
Both biodiesel and renewable diesel are part of the U.S. Environmental Protection Agency’s Renewable Fuel Standard program. This program mandates that transportation fuel in the country must meet renewable requirements. However, renewable diesel has a slight advantage over biodiesel as it receives slightly more credits in the program.
Paul Winters, the public affairs and federal communications director at Clean Fuels Alliance America, which represents renewable organizations, is not surprised by the West Coast’s growing preference for biofuel over diesel.
“The California and Oregon low-carbon fuel programs have been very successful in displacing petroleum with better, cleaner fuels. In California, renewable diesel and biodiesel now make up more than 45% of the state’s diesel fuel pool. And in Oregon, these fuels make up 14% of the diesel market. These states represent a considerable part of the nation’s diesel market, so it’s not surprising that there’s now a recognizable impact on market data,” Winters said.
He also noted that the EPA’s finalized Renewable Fuel Standard rule for 2023, 2024, and 2025 received criticism for neglecting to consider the industry’s growth and impact. This has sparked a significant backlash from biofuel interests, particularly agricultural states, as the rule sets lower levels that contradict both current and future production levels and growth potential.
“The final biomass-based diesel volumes in the volumes simply don’t match the volumes available in the market,” Winters said. “It’s also apparent that EPA failed to understand the change in EIA reports, recategorizing refinery input adjustments as renewable product supplied. In the final rule, EPA decided to adjust EIA’s reported volumes of gasoline and diesel by 3.5%. This mechanism did not appear in the proposal — there was no opportunity for public comment. It’s possible that they would not have taken that step if they had consulted with EIA on this change in data reports.”
The Energy Information Administration (EIA) has revised their outlook on U.S. renewable diesel production due to the recent renewable fuel ruling by the Environmental Protection Agency (EPA). Although the forecast for growth in renewable diesel production has been reduced, the EIA still anticipates an increase in production, reaching 219,000 barrels per day by 2024. This projection is 2.8% lower than the previous estimate prior to the EPA’s ruling. Currently, the U.S. is producing 161,000 barrels per day of renewable diesel for this year.
Source: Transport Topics
