Soybean oil rapidly gaining ground as renewable diesel feedstock

The skyrocketing growth in the production of renewable diesel has been accompanied by a dramatic expansion of soybean oil as a feedstock for the fuel, said three University of Illinois agricultural economists on Wednesday. Soybean oil’s share of the feedstock market has tripled in the past few years, to 27.4%, while the shares held by other feedstocks have been stagnant or declined.

“In terms of individual feedstocks, soybean oil has clearly been the biggest winner so far during the renewable diesel boom,” wrote agricultural economists Maria Gerveni, Scott Irwin, and Todd Hubbs on the farmdoc daily blog. In two years, soybean oil’s market share has increased by 18.2 percentage points.

Yellow grease, which includes used cooking oil, was the leading feedstock, with 29.1% of the market, the same as at the start of this decade. The share for tallow, once the dominant feedstock, was squeezed down to 15.3%. Corn oil accounted for 15.5% of the market, down by 3.3 points.

“Almost no soybean oil was used to produce renewable diesel before 2018, yet by 2022, its market share had risen to 26.9 percent,” said the blog. “The market share for corn oil was relatively steady, by comparison.”

Feedstock use for renewable diesel, which was a little more than 2 billion pounds in 2017, soared to nearly 13 billion pounds in 2022. A variety of vegetable oils and animal fats are used to make renewable diesel at a conversion rate of 8.5 pounds of feedstock per gallon of fuel, the three economists wrote.

Almost all of the renewable diesel produced in America is consumed in California, with the state’s Low-Carbon Fuel Standard acting as an incentive. Renewable diesel is produced through a different process than biodiesel and is chemically equivalent to petroleum diesel.

The USDA estimates that 12.8 billion pounds of soybean oil, or 47 percent of U.S. soybean oil production, will be used in biofuels in the 12 months that began on Oct. 1. Two years ago, 10.4 billion pounds of soybean oil went to biofuels, or nearly 40 percent of production. In its long-term agricultural baseline, the USDA projects that 13.6 billion pounds of soybean oil, or 49 percent of production, will be used for biofuels in the year beginning Oct. 1, 2024, and that 14 billion pounds will be used the year after that.

About 55 percent of U.S. biodiesel is produced from soybean oil, a dominant position that has held steady for years, said the University of Illinois researchers.