U.S. renewable diesel and biodiesel producers ramped up operations in October, achieving multi-month utilization highs driven by improved margins, according to advisory group AEGIS Hedging.
Renewable diesel producers utilized 77% of total operable capacity in October, the highest since July 2024. Biodiesel plant utilization reached 89%, a peak not seen since June 2023. The rebound comes after a challenging start to 2024, when oversupply and slowing demand forced biodiesel plant closures.
Renewable diesel, which can fully replace conventional diesel, has become the industry’s preferred biofuel, benefiting from stronger government incentives. While total biodiesel production capacity fell 4.2% year-over-year to 2 billion gallons in October, renewable diesel capacity grew nearly 19% year-over-year to 4.58 billion gallons, according to the U.S. Energy Information Administration (EIA). However, oversupply trimmed renewable diesel capacity by 6% from a record 4.90 billion gallons in June.
Profitability in October was bolstered by higher prices for federal biofuel compliance credits (D4 Renewable Identification Numbers), which surged from 56 cents in September to over 71 cents. The value of credits under California’s Low Carbon Fuel Standard program, a key driver for biofuel demand, also rose from below 60 cents in September to over 70 cents in October.
Stronger demand for diesel, which reached a one-year high in October, further lifted prices for both conventional and renewable fuels, said Zander Capozzola, Vice President of Renewable Fuels at AEGIS. “The surge in compliance credits and stronger diesel demand have provided much-needed relief for the biofuels industry,” Capozzola added.
The biofuel sector’s recovery reflects a mix of market-driven demand and policy incentives, underscoring the critical role of government support in sustaining renewable energy production.
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