US Biofuel Producers Ramped Up in Oct as Profitability Improved, Data Shows

U.S. renewable diesel and biodiesel producers ramped up operations in October to multi-month highs, helped by stronger margins for the biofuels, according to data compiled by advisory group AEGIS Hedging. Renewable diesel producers utilized 77% of their total operable capacity in October, the highest since July 2024, the data showed. Biodiesel plant utilization rose to 89%, the highest since June 2023.

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Rising utilization rates and improving margins are a welcome relief for the biofuels industry, after operators endured a rough start to 2024 as demand growth slowed, leaving the market oversupplied and forcing a number of biodiesel plant closures. Both renewable diesel and biodiesel are more expensive to produce than diesel, making suppliers dependent on government incentives such as tax credits.

Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to data released by the U.S. Energy Information Administration (EIA) on Tuesday. Renewable diesel output capacity rose nearly 19% year-over-year to 4.58 billion gallons in October, as most new biofuel plants opened in the past three years were geared towards it.

Still, oversupply pushed renewable diesel output capacity 6% lower in October from a record 4.90 billion gallons in June. In addition to plant closures, profitability for the industry in October was boosted mainly by a surge in the value of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of renewable fuels at AEGIS.

D4 Renewable Identification Numbers, issued for biodiesel and renewable diesel production, rose from a low of 56 cents each in September to over 71 cents in October, improving profitability for making the fuels, Capozzola said. Margins were also helped by stronger demand for diesel, which hit a one-year high in October, raising prices for both the conventional fuel and its alternatives, he said.

Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., also rose from below 60 cents each in September to over 70 cents each in October, according to AEGIS. "You really had everything rowing in the right direction in October," Capozzola said.