Market Update: On July 9th, 2015 EIA proposed
changes to their Monthly Biodiesel Production Report to add biojet/biokerosene, bionaphtha, and renewable diesel. All of these fuels qualify to generate RINs under the RFS2 program and can be used by obligated parties for compliance. EIA is trying to better understand these markets because they are required by law to give renewable fuel consumption data to EPA to issue their Renewable Volume Obligations (RVOs). Unfortunately, due to EIA's budget and personal constraints these proposed changes will not occur in 2016.
EPA's internal EMTS database is currently the only source with aggregate domestic non-ester renewable diesel production data. Despite the name, this data also includes some renewable jet fuel. The EMTS data available to the public on EPA's website includes combined domestic and imported renewable fuels. However, when EPA published their proposed and final rules they included supplemental information on the Regulations.gov website revealing just domestic renewable diesel, jet, & marine fuel production data combined for 2013 at 110 million gallons, 2014 at 158 mil gals, and 2015 estimated at 192.2 mil gals. It's hard to say how accurate these numbers are because EPA data contains RIN generation errors, spills, noncompliance production, etc. that overstates actual volumes.
PRX has undertaken a historical review of the growing US renewable diesel and renewable jet fuel markets to help fill in this lack of data. In 2006, UOP developed the Honeywell Green Diesel technology and soon later the Honeywell Green Jet Fuel technology. They partnered with Sustainable Oils and provided over 800,000 gallons of renewable jet and diesel fuel to the U.S. Military for testing under Defense Logistic Agency contracts between 2009 and 2011. UOP does not produce commercial quantities of renewable fuels, but licenses its technologies.
Dynamic Fuels, previously jointly owned by Syntroluem Corp. and Tyson Foods, was the first large scale biorefinery in the US with a production capacity of 75 million gallons of renewable diesel, biojet, and bionaphtha per year. It began production at the end of 2010, producing 2.9 million gallons of renewable fuel, of which 44,300 gallons were used for jet fuel testing. In 2011, it produced 33.5 mil gals of renewable fuel, with 10,000 gallons used for jet fuel testing as well. In 2012, 30.2 mil gals were produced, with 100,000 gals being jet fuel and 350,000 gals being marine fuel for the Navy before it shutdown due to financial difficulties. Renewable Energy Group purchased the plant and restarted production in 2014, producing 12.8 mil gals of renewable hydrocarbon diesel (RHD). In 2015, only 10.3 mil gals of RHD were produced due to fires at the plant; it's expected to restart anytime now.
Diamond Green Diesel, using UOP's Ecofining technology, is the largest producer of renewable diesel in the US, with current production capacity at 160 million gallons per year. Diamond's first year of commercial production was in 2013 when it produced an estimated 54.4 mil gals of renewable diesel. In 2014, the plant was shutdown shortly due to a fire, but still produced 126 mil gals of renewable diesel. In 2015 through Q3, 120.9 mil gals of renewable diesel was produced, with PRX estimating an additional 40 mil gals produced in Q4, rounding out 2015 production at 160.9 mil gals. Also in 2015, Diamond provided a 5% blend of green jet fuel with petroleum jet fuel for a Boeing 757 test flight.
AltAir Fuels has a pilot plant in Houston that has provided over one million gallons of jet fuel to commercial airlines and the U.S. Military for aviation testing since 2008. In 2013, AltAir began retrofitting an existing refinery, using UOP's Renewable Jet Fuel process, outside Los Angeles in Paramount, CA to continuously produce 30 million gallons per year of both renewable jet and diesel fuel, along with renewable chemicals. In late 2014, AltAir increased the plant's capacity to 40 mil gal/yr and has plans to increase capacity up to 150 mil gals/yr by 2017. In January 2016, AltAir delivered 7.76 million gallons of renewable marine diesel to the Navy. They are also beginning to deliver some of the 15 million gallons United Airlines has contracted to purchase over 3 years.
These plants' production represents the majority of the US renewable diesel and jet fuel markets. PRX estimates total renewable diesel and jet fuel production using this data at 3 mil gals in 2010, 34.2 mil gals in 2011, 30.2 mil gals in 2012, 54.4 mil gals in 2013, 138.8 mil gals in 2014, and 174.5 mil gals in 2015.
The US renewable diesel and jet fuel markets continue to grow even with historically low crude oil prices because of federal, state, military, DOE and USDA incentives. The RFS2 provides additional value through Renewable Identification Numbers to biomass-based diesel producers. The $1/gallon biodiesel blender's tax credit has been extended through 2016 and can be claimed for renewable diesel blending. California's Low Carbon Fuel Standard offers value through Carbon Intensity points for renewable diesel. Long-term military contracts and future commitments by US armed forces to increase their use of renewable fuels is helping to drive industry expansion. DOE and USDA grants and loans have kick-started this industry and are continuing to help it grow.
