Soybeans are an important and widespread oilseed crop in the U.S., due, in part, to soybean byproducts. Soybean meal serves as feedstock for livestock and soybean oil can be converted into biodiesel and renewable diesel.
Biodiesel and renewable diesel differ in their refining process, viability in cold weather, and storage. Biodiesel requires less capital in its refining process than renewable diesel, while renewable diesel has better cold weather handling properties and can be transported in existing pipelines.
The demand for renewable diesel continues to rise in the U.S., as many states work to lower their carbon footprint. California has greatly influenced this demand by prioritizing renewable diesel over biodiesel for terrestrial fuel to meet the California Air Resources Board’s Low Carbon Fuel Standard. Petroleum marketers in California capitalize on this by innovating products to meet the low carbon requirement. This provides economic opportunities for U.S. agriculture, especially for soybean oil, canola oil, and other vegetable oils.
The market’s new dilemma stems from the proposed renewable volume obligation for biomass-based diesel, set by the Environmental Protection Agency (EPA). This proposed volume is lower than what the soybean sector had anticipated; considering existing biodiesel plants and proposed renewable diesel plants.
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