U.S. Biodiesel Imports Have Doubled Since 2022 Due To Low Prices In Europe

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Annual U.S. biodiesel imports doubled from 2022 to 2023 to 33,000 barrels per day (b/d) and continued to rise within the first two months of 2024, in line with the most recent data obtainable. A lot of the rise in biodiesel imports has come from Germany, and the remaining enhance has come largely from elsewhere in Europe, the place a biodiesel surplus has lowered costs.

How a lot biodiesel was the USA importing earlier than the current enhance?

U.S. imports of biodiesel, a transportation and heating gasoline usually blended with petroleum diesel or heating oil, averaged 12,000 b/d between September 2017 and October 2022.

The U.S. Renewable Fuel Standard program underpins biodiesel demand in the USA. Within the early years of this system, which was enacted in 2005, required mixing volumes for renewable fuels reminiscent of biodiesel had been very low, and imports had been minimal. As this system has matured, biofuel mixing necessities have regularly elevated, resulting in rising biodiesel consumption, imports, and manufacturing.

Annual U.S. biodiesel imports elevated between 2013 and 2017 to 27,000 b/d due to subsidized biodiesel from Argentina and Indonesia. In response to those subsidies and elevated imports, the U.S. Division of Commerce and Worldwide Commerce Fee initiated trade investigations in April 2017 that resulted in antidumping duty and countervailing duty orders that put duties on biodiesel imports from these nations to offset the results of the subsidies. As a result of imports from Argentina and Indonesia made up nearly three-quarters of whole U.S. biodiesel imports between 2013 and 2017, U.S. biodiesel imports decreased considerably after the investigation and orders.

How a lot biodiesel has the USA been importing not too long ago?

The current enhance in U.S. biodiesel imports started in November 2022, when imports of biodiesel reached 30,000 b/d. U.S. biodiesel imports continued to develop in 2023 to 33,000 b/d and have elevated additional in 2024. In February 2024, the USA imported 54,000 b/d of biodiesel, probably the most for any month since June 2017.

Why have biodiesel imports elevated?

U.S. biodiesel imports have elevated largely due to low biodiesel costs in Europe, which have made importing biodiesel from Europe economically engaging. Biodiesel costs in Europe have been low due to insurance policies associated to the EU’s Renewable Energy Directivewhich drives renewable power targets.

An updated Renewable Energy Directive (RED II) capped the biofuels portion of the European renewables goal in transportation at 7%, though every EU member state implements its personal rules. Many EU member states permit superior biofuels, which the EU defines as biofuels produced from used cooking oil or different specified feedstocks, to count twice towards mixing targets.

Elevated biodiesel imports into the EU from China, elevated renewable diesel consumption rather than biodiesel to satisfy EU mixing targets, and lowered biofuel targets have all contributed to reducing biodiesel costs in Europe:

• Elevated renewable diesel consumption: As a result of RED II and EU member state regulatory packages don’t differentiate between renewable diesel and biodiesel, renewable diesel consumption can be utilized as an alternative of biodiesel to satisfy mixing targets. Renewable diesel is totally interchangeable with petroleum diesel. It may be blended into diesel in any amountin contrast to biodiesel, stimulating production growth in recent years that has introduced many EU nations close to the EU’s 7% total biofuels cap.
• Biofuel goal reductions: Some EU member states have reduce biofuel targets in response to excessive inflation. Probably the most notable of those goal cuts was in Swedenwhich beforehand had more ambitious targets than the EU required. In 2023, Sweden introduced it might scale back the required share of biofuels in diesel for 2024–26 from 30.5% to six.0%. Along with Sweden, other EU member states have carried out numerous measures to cut back biodiesel necessities and, subsequently, consumption in Europe.

As biofuel margins have narrowed in Europe, some biofuel producers have seemed to the USA to acquire increased costs. U.S. biodiesel imports started rising in late 2022 when costs for compliance credit generally known as renewable identification numbers (RINs) were near record highs and biodiesel prices in Europe started to decline. As biodiesel prices in Europe fell further in early 2023U.S. RIN costs remained comparatively excessive. Though RIN costs have decreased since mid-2023 to three-year lows in 2024the rise in flows from Europe to the USA signifies that biodiesel in the USA remains to be promoting at a premium to biodiesel in Europe.

The place has the USA elevated imports from?

A lot of the rise in U.S. biodiesel imports has come from Germany. From 2022 to 2023, U.S. biodiesel imports from Germany greater than doubled to 11,000 b/d, making it the highest supply of U.S. biodiesel imports. Many of the remaining enhance in U.S. biodiesel imports was from Spain, Italy, and Belgium, with small will increase additionally coming from South Korea and Brazil.

The distribution of U.S. biodiesel imports displays manufacturing in these nations. Germany produces significantly more biodiesel than some other nation in Europe and imports the second most. Spain, Italy, and Belgium are additionally biodiesel-producing nations and major biodiesel exporters.

Distribution of U.S. biodiesel imports additionally displays the geographic footprint of biofuel corporations benefiting from arbitrage alternatives. For instance, company-level import information present that Archer-Daniels-Midland (ADM)—a world agricultural processing and commodities buying and selling firm with biodiesel crops in Germany, Canada, Brazil and the USA—has been the importer of record for many of the U.S. biodiesel imports since November 2022, together with all of the biodiesel from Germany. ADM owns an export terminal in Hamburg, Germanylinked to its oil-seed processing plant, which is Europe’s largest. This terminal has been the supply of all U.S. biodiesel imports from Germany since 2022, in line with Vortexa tanker monitoring information.

How have imports affected biodiesel manufacturing and consumption in the USA?

Regardless of rising imports and elevated competitors from the manufacturing of renewable diesel, U.S. biodiesel manufacturing elevated by 5% in 2023 from 2022. Due to rising imports and home manufacturing, probably the most biodiesel was consumed in the USA in 2023 than in any 12 months since 2017.

Nonetheless, we forecast U.S. biodiesel manufacturing to lower in 2024 as a result of we assume that mixing margins will likely be decrease than in 2023, largely attributable to decrease RIN costs. Though elevated manufacturing of renewable diesel is the first motive for our assumption of decrease RIN costs and mixing margins, excessive biodiesel imports are additionally a contributing issue.

Though we don’t explicitly forecast biodiesel imports, we do forecast web U.S. imports of biodiesel (imports minus exports). We forecast web biodiesel imports to be about the identical in 2024 as in 2023 due to excessive imports early within the 12 months and continued lowered demand in Europe. Nonetheless, we anticipate web imports to stage off over the course of the 12 months as growing production of renewable diesel will increase home biofuel provide.

Principal contributor: Jimmy Troderman. From Today in Energy.