US biodiesel production declined in the first quarter - EIA
Renewable diesel and biodiesel production in the US “fell sharply” in the first quarter of this year, the US Energy Information Administration (EIA) has reported.
IMAGE: Biofuel barrels. Getty Images
Renewable diesel and biodiesel are biomass-based diesel fuels that can replace petroleum-based distillate. The decline in production was largely due to uncertainty related to the US federal government’s biofuel tax credits and negative profit margins, EIA said.
Biodiesel production in January 2025 fell to 60,000 b/d, about 40% less than the same time last year. “Trade press has suggested negative margins for biodiesel,” according to the IEA. Producers partially ramped up production in February and March, to reach an average quarterly production of about 70,000 b/d, a decrease of more than 30% from the first quarter of 2024.
Renewable diesel production averaged about 170,000 b/d in the first three months of this year, down 12% from the corresponding months last year. “The decrease in renewable diesel production was not as large on a percentage basis as the decrease in biodiesel production, mostly because renewable diesel production increased at a greater rate than biodiesel production in 2024,” the EIA said.
Poor profitability in the first quarter of 2025 was a primary reason contributing to the declines. Major US renewable diesel producers including Diamond Green Diesel, Phillips 66 and Marathon Petroleum, reported quarterly operational losses during the same period, the EIA reported.
Production of biomass-based diesels further fell in the January-March period due to uncertainty over the US federal biofuel tax credits. Until 2025, US producers and importers received a $1/gal blender’s tax credit (BTC) for blending biomass-based diesel with regular petroleum-based diesel. But starting next year, that credit will be replaced by a new system under the 2022 US Inflation Reduction Act, which will base the $1/gal incentive the carbon intensity of the feedstocks used.
However, because the government hasn’t yet provided clear guidelines on how the new system will work, many producers are unsure whether producing the renewable diesel will remain profitable, prompting some to pause operations, the EIA notes.
The US energy agency forecasts a 5% increase in annual renewable diesel production from 2024, while it sees biodiesel production in 2025 to be 15% lower than in 2024 “because of low production early in the year and an assumption that some biodiesel plants with less favorable economics may close.”
Global energy companies such as Shell, TFG Marine, and Stone Oil supply biofuels for bunkering across the US Gulf Coast and major US ports including New York. However, it remains unclear whether these firms source their biofuels locally. Despite their presence, the US biofuel bunker market is still in its early stages, mainly due to limited commercial incentives.
By Aparupa Mazumder
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