By producing fuel using sources with lower carbon intensity compared to traditional petroleum based products, the U.S. biofuels sector is well-positioned to play a major role in reducing greenhouse gas emissions.
The recently enacted Inflation Reduction Act is expected to boost biofuels by providing tax credits and funding to develop next-generation biofuels, including renewable diesel and sustainable aviation fuel.
While electric vehicle adoption may eventually reduce demand for ethanol – which currently dominates U.S. biofuel production – prices of lithium batteries are surging due to supply shortages. Higher battery prices will likely slow demand for EVs and extend the time frame for mass EV adoption, cushioning the rate at which EVs disintermediate ethanol fuel.
Driven in part by major oil companies’ embrace of renewable diesel, numerous stakeholders have announced plans for new soybean crush and refinery projects over the past two years. If these projects come to fruition, RD capacity would grow more than six-fold to 6.5 billion gallons per year by 2030.
The expected growth in soybean oil-based renewable diesel will require considerably more soybean bushels for domestic crush. To satisfy this demand, the U.S. would need to (theoretically) stop exporting whole soybeans while planting 17.9 million additional acres of soybeans (21% larger than the current crop) to satisfy the incremental biofuel demand.
Besides importing soybeans, the alternatives to shifting massive farm acreage would include growing other types of oilseeds (such as canola and sunflower) at a larger scale, importing other vegetable oils, and/or using other feedstock such as beef tallow to produce renewable diesel fuel.
