By Scout Nelson
Nebraska's soybean scene is witnessing remarkable growth, thanks to soaring demand for soybean oil used in renewable diesel production. Renewable diesel, a less carbon-intensive alternative to petroleum diesel, fits gallon-for-gallon as a substitute, supported by state and federal policies promoting low carbon fuels.
These policies, including the Renewable Fuel Standard (RFS) and tax incentives, have ignited a demand surge, particularly in California where 97% of the nation's renewable diesel is consumed.
Since 2020, renewable diesel refining capacity has expanded from 800 million gallons to over 4 billion, with expectations to hit 7 billion gallons. This boom has led to increased soybean crush capacity, growing to 2.1 billion bushels with an anticipated rise of 600 million bushels by 2026.
Scott Irwin from the University of Illinois points out the boom is primarily policy-driven, suggesting a natural market demand limit exists. With production poised to exceed demand, the industry faces potential adjustments. This could mean shelving expansion projects, downsizing facilities, or exploring new markets like exports to Canada.
"Scott Gerit says 97 percent of the country’s renewable diesel consumption occurs in California," highlighting the regional concentration of demand.
The state's soybean producers and economy currently benefit from this boom. But without further government action to stimulate demand, the renewable diesel surge could eventually fizzle, suggesting a need for strategic adjustments to ensure long-term viability and balance between demand and supply.
Photo Credit -gettyimages-gilaxia
Categories: Nebraska, Energy, Government & Policy