The U.S. refining industry is shrinking thanks to a decreased demand for products. Some say that may be good news for renewable diesel, a substitute for conventional diesel that has a variety of tax incentives behind it, according to FreightWaves.
Three significant refinery closures in California and New Mexico have been announced in recent weeks resulting in about 320,000 less barrels per day being produced. That’s a significant loss of capacity compared to losses in last 15 to 20 years from refinery closures. An Energy Information Administration list of refinery closures reported few shutdowns in the past several years, though a big refinery in Philadelphia shut down permanently last year following an explosion and resulting in the loss of about 335,000 barrels per day.
According to FreightWaves, some of the capacity loss may be replaced by continued investments in renewable diesel. Two of the refineries slated for closure will be converted into renewable diesel plants. Still the question remains whether the push for renewable diesel will offset the loss of conventional diesel because of the refineries closing.
Renewable diesel is not the same thing as biodiesel though they are made of similar feedstocks. The big difference is that renewable is a one-for-one substitute as a fuel, not a blendstock added to diesel or heating oil. Renewable diesel is also made at refining facilities through hydrotreating and gasification, while biodiesel is made at small facilities using another process.