US renewable diesel production capacity posts largest monthly decline on record
By Shariq Khan
NEW YORK, Sept 30 (Reuters) - U.S. renewable diesel production capacitydeclined in July by the most since the industry began its rapid expansion three years ago, data from the Energy Information Administration showed on Monday.
Capacity to produce biomass-based renewable diesel and other biofuels, excluding biodiesel and ethanol,fell by about 299 million gallons per year from June to about 4.60 billion gallons a year in July, the second time it has declined since the EIA began keeping records in 2021.
The EIA did not immediately respond to a request seeking more inputs on what the decline is based on.
Well-established oil refiners and startups have made large bets on renewable diesel in recent years as government mandated consumption targets and subsidies lowering costs of production have encouraged investments in supply growth. However, output from new plants is starting to outpace demand, leading to a glut in the market.
Vertex Energy VTNR.O, one of the newest entrants in the U.S. renewable diesel industry, filed for Chapter 11 bankruptcy protection last week, just months after it paused output of the biofuel, citing macroeconomic weakness.
Demand for vegetable oils as feedstock for renewable diesel production, which include canola oil, corn oil and soybean oil, fell more than 5.6% from June to 1.168 billion pounds in July, the EIA data showed.
Demand for the same feedstocks from facilities producing biodiesel, which is blended into petroleum-based fuel to lower emissions, rose 5.6% from June to 866 million pounds in July, according to the data.
Demand for waste oils, fats and greases, such as tallow and used cooking oil, rose to 1.43 billion pounds in July from 1.38 billion pounds in June, the data showed.
Those consumption levels indicate biofuel producers are running their plants below capacity, said Zander Capozzola, vice president of renewable fuels at AEGIS Hedging.
At current capacity, renewable diesel plants could burn through at least 3.162 billion pounds of feedstocks per month, while biodiesel producers would consume another 1.288 billion, if they were running at full capacity, Capozzola said.
Reporting by Shariq Khan in New York
Editing by Marguerita Choy
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