NEW YORK (Reuters) – US feedstock demand is expected to increase in the coming years from renewable fuel producers as companies seek to increase production.
Energy from materials derived from plants and animals, or biomass, currently accounts for approximately 5% of US energy consumption, slightly more than wind and solar energy. Most energy consumption in the United States continues to be based on fossil fuels such as oil and natural gas.
The United States and other countries are trying to cut overall carbon emissions and reduce the use of polluting fossil fuels. Refiners, farmers and agricultural giants hope to gain a foothold in the fuel supply by producing fuels from biomass.
But biomass fuel production may face constraints as farmers need to harvest more soy and other products to meet growing demand, while companies that collect and process animal fats or waste cooking oil also need to expand.
Fuels such as biodiesel, renewable diesel and clean aviation fuels are sourced from the same pool of feedstocks, and analysts warn that there may not be enough lower carbon feedstocks to sustain it.
(GRAPHIC: Oil Uses in 2020, here)
According to an October 2020 BMO Capital Markets report, demand for soybean oil alone will significantly exceed supply by 2023. The financial services provider estimates additional demand for soybean oil at £ 8 billion by 2023 due to increased production of renewable diesel fuel. …
“The raw material problem is going to be a huge problem. Dealing with this issue will not be easy, ”said Robert Campbell, head of petroleum research at Energy Aspect.
According to the Annual Energy Outlook, renewables accounted for 9.11 quadrillion British thermal units, or 9.8% of total energy consumption in 2020. By 2024, this figure will grow to 12.23 quadrillion BTU, or 12.5% of total energy consumption.
RENEWABLE PRODUCTIONS ON THE RISE
Biomass can produce fuels such as renewable diesel, biodiesel, clean aviation fuel and ethanol.
Renewable diesel production capacity is expected to increase almost fivefold by 2024 to about 2.65 billion gallons (63 million barrels), investment bank Goldman Sachs said in October. But that would require an additional 17 billion pounds of feedstock, creating friction between existing biodiesel consumers and food, the report said.
The United States produced 533 million gallons of renewable diesel fuel in 2020, according to data from the Environmental Protection Agency Reuters.
According to the Energy Information Administration’s Annual Energy Outlook, biodiesel production in the United States is approximately 110,000 barrels per day, much less than refineries, which last year had an operating crude oil distillation capacity of about 19 million barrels per day, according to the EIA.
(GRAPHIC: raw materials used for the production of renewable fuels, here)
While biodiesel requires about 7.5 pounds per gallon of feedstock, renewable diesel requires about 8.5 pounds per gallon, according to Goldman Sachs. They estimate that there will be a £ 13 billion shortage of raw materials by 2024 as new processing facilities are launched. Sustainable aviation fuel production will further increase demand for renewable raw materials.
While other low-carbon feedstocks such as lard and waste cooking oil are gaining traction thanks to government incentives, producers continue to rely heavily on corn and soybean oil for biofuels.
(GRAPHIC: Renewable diesel versus gasoline and crude oil production, here)
Stephanie Kelly reporting; Editing by Diane Craft