SASKATOON — There isn’t quite as much furor surrounding the renewable diesel and sustainable aviation fuel sectors of late, according to an expert.
“Growth has certainly slowed from the heyday of 2018, 2019 and 2020 when it seemed like there was a project a week,” Jim Lane, publisher of Biofuels Digest, said in a recent webinar.
There are 23.7 billion gallons of planned capacity that have been announced around the globe.
While that is an impressive number, the rate of expansion is slowing. It is up only three per cent from 2024 levels.
However, there is still plenty of interest in the sector with companies like Neste Oyj, World Energy, SPG Bioenergy and Diamond Green Diesel committing to projects boasting billions of gallons of production.
“It’s not quite petroleum scale but certainly getting to a very interesting level of capacity,” Lane said in a webinar promoting the Advanced Bioeconomy Leadership Conference 2025.
Major players like Shell, BP and Marathon Oil Company are making investments despite some of the headwinds facing the industry.
The U.S. Energy Information Administration is forecasting that the West Texas Intermediate crude oil price will drop to about US$60 per barrel by 2026, which would be about half the level it was in 2022.
“That’s going to make a more challenging competitive environment for renewables,” he said.
Lane believes that price forecast has a lot to do with U.S. President Donald Trump’s election promise to, “drill, baby, drill.”
In the meantime, actual production of biodiesel and renewable diesel in the U.S. is a fraction of what is being proposed.
Production is expected to reach about 350,000 barrels per day in 2026, well short of the planned capacity of about two billion barrels per day.
The main reason for that underwhelming performance is the U.S. Environmental Protection Agency’s disappointing renewable volume obligation (RVO) targets for 2023-25, which were set well below industry expectations.
The EPA also has a habit of dragging its feet on announcing the next round of RVOs. It is expected to finalize the 2026 RVO in December 2025, more than a year after its statutory deadline of November 2024.
That makes it difficult for companies to deploy capital, said Lane.
He said the market driver for bioeconomy projects has swung to sustainable aviation fuel, carbon and hydrogen from renewable diesel.
Lane expects 2025 to be a “tipping point” for biofuel projects. Fifty-nine countries have set net-zero targets. Those countries account for 54 per cent of global greenhouse gas emissions.
There is talk that some of those countries are going to back away from their net-zero targets starting in 2025.
However, he noted that biofuel policy is also set at the state level in the United States, with California, Oregon, Washington and New Mexico already having low carbon fuel standards in place. Five other states have active bills in the works and three more are considering legislation.
Some of those same states are pushing policies that promote electric vehicles over renewable diesel.
However, Lane noted that the American Transportation Research Institute recently released a report showing that renewable diesel emissions for heavy duty trucks are half that of electric trucks.
Trump recently signed the Unleashing American Energy executive order that eliminates the electric vehicle mandate and any unfair subsidies and other market distortions that favour electric vehicles over other technologies.
It orders heads of all government agencies to eliminate policies and procedures that impose an undue burden on the development or use of domestic energy sources.
The biofuel sector originally worried that the Trump administration would favour oil over biofuel, but Trump’s order pertains to removing barriers for both types of fuel, as well as natural gas, coal, hydropower, critical minerals and nuclear energy.
California was going to stop selling non-electric light duty vehicles as of 2035, but it looks like that initiative could also be “clawed back,” said Lane.
On the feedstock front, he noted that agricultural feedstocks account for 162 of the 691 million tonnes of the annual supplies of feedstock in the near-term. Most of the remainder is forestry/wood and agricultural residues.
There is a huge shortfall of fats, oils and grease feedstock, with only three million tonnes available.
“That has been a real constraint for things like renewable diesel,” he said.
The industry will likely have to shift to using more forestry/wood and agricultural residues.
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