U.S. Renewable Diesel Market Size, Share, Report 2024 to 2033

U.S. Renewable Diesel Market Size and Growth 2024 to 2033

The U.S. renewable diesel market size was valued at USD 10.58 billion in 2023 and is expected to hit around USD 20.45 billion by 2033, growing at a compound annual growth rate (CAGR) of 6.81% from 2024 to 2033.

Renewable diesel is a type of biofuel made from various renewable feedstocks: vegetable oils, animal fats, and waste oils. Unlike traditional biodiesel, renewable diesel is chemically identical to petroleum diesel and can be used directly in existing diesel engines without modification. It is produced through a hydrogenation process whereby the biomass feedstock has its oxygen removed, creating a fuel that is far more stable, having much higher energy density, while it burns cleaner, too, compared to conventional diesel.

The renewable diesel market is developing rapidly due to increasing demand for low-carbon fuels, government requirements, and other financial incentives targeted at reducing GHG emissions. Furthermore, its ability to be smoothly integrated into existing fuel infrastructures makes this renewable fuel an attractive option for both transportation and industrial sectors. North America and Europe lead the main production and consumption of renewable diesel. It is dominated by such flagship companies as Neste, Valero, and Renewable Energy Group. The renewable diesel market can be expected to attain reasonable growth in view of the fact that sustainability recently has turned to a major focus globally. This expectation is corroborated by continuous development in production technologies and a favorable regulatory environment.

The U.S. renewable diesel market is a dynamic sector dedicated to providing a variety of sustainable fuel solutions, including production, distribution, and application across diverse industries. Fueled by technological advancements in refining processes and feedstock innovations, along with growing consumer demand for eco-friendly and efficient fuel options, the market is rapidly expanding. Key drivers include government incentives, regulatory mandates for reduced emissions, and increased awareness of the environmental impact of fossil fuels.

Moreover, the seamless integration of renewable diesel into existing infrastructure and the exploration of new applications are enhancing adoption and operational efficiencies. Despite challenges such as high production costs and feedstock supply issues, the market remains strong and continues to progress, supported by technological innovations and heightened environmental awareness.

• According to the U.S. Energy Information Administration, for the first time, in January 2023, U.S. renewable diesel and other biofuels production capacity reached 3 billion gallons per year, surpassing biodiesel. In comparison, renewable diesel capacity has tripled since 2021, while biodiesel has fallen 13%. Altogether, U.S. biofuel capacity, including ethanol, reached 23 billion gallons per year, with ethanol at 78%, renewable diesel and other biofuels at 13%, and biodiesel at 9%.
• Because diesel fuel is considered to be the second most major transportation fuel among all types in California, it constitutes 17% of all fuel sales. In 2022, 3.6 billion gallons of diesel-off-road diesel included-were sold within the state.

Report Scope

U.S. Renewable Diesel Market Growth Factors

• Government Initiatives and Policies: Government initiatives and policies are acting as a major support for renewable diesel markets. Programs like RFS and biomass-based diesel tax credits are some of the major incentives for the production and use of renewable diesel. Such policies attract investments in renewable fuel technologies and infrastructures, foster technological advancements, and scale up production capabilities of those businesses. Commitments by the government to carbon emission reductions and clean energy on top of these therefore reinforce actions along both vectors, so guaranteeing a positive regulatory environment that supports the growth of this market.
• Technological Advancement: The advancement of technology is an indispensable factor in the biofuel production of renewable diesel. Innovations such as advanced hydrotreating and co-processing techniques increase the efficiency of renewable diesel production and its scalability. These further develop the fuel quality with a product chemically closer to petroleum diesel, thus fully functional for existing engines and infrastructures. The production cost is also drastically reduced because of the use of different feedstocks, such as wastes of oils and fats. As such, biofuels could be made more sustainable. Moreover, continuous R&D of biofuel technologies is likely to further improve and increase market penetrations.
• Sustainability and Ecological Gains: The increasing focus on sustainability and environmental benefits are among the significant growth drivers of the renewable diesel market. Renewable diesel is being used to replace conventional diesel, which produces much lesser levels of greenhouse gas emissions. Renewable feedstocks and waste come into play in producing it, so it aligns with the environmental policy and corporate objectives on sustainability. Companies and consumers alike are focused on reducing their carbon footprints, thereby driving up demand for eco-friendly fuel options. Global climate initiatives and the dire need to combat climate change supplement such a shift towards sustainable energy solutions.
• Rising Demand for Clean Energy: Owing to the ever-growing demand for clean and renewable sources of energy, there has been a surge in the Renewable Diesel market. Not only are consumers but businesses also increasingly considering environmental constraints while looking for cleaner options. It is due to this fact that renewable diesel, being the direct substitute for conventional diesel, finds growing utilization in various sectors such as transportation and industrial applications. This demand arises due to the need for sustainable energy solutions that minimize emissions and, subsequently, improve the quality of air. Furthermore, with raised awareness of ecological problems, there is a bigger market for renewable diesel supported by strong infrastructure and policy frameworks.
• Expansion of Production Capacity: The growth factors include the expansion of renewable diesel production capacity in the U.S. Considerably, huge investments are being made in new production facilities, while several refineries are being converted for renewable diesel production. This shall be crucial in meeting the growing demand for renewable fuels and ensuring supplies. With the increased production capacity, economies of scale can be achieved to reduce costs and give renewable diesel some competitiveness with conventional diesel. This strategic focus on scaling up production capabilities is very market-driven, supported by favorable government policies that permit such continued growth in the sector.

U.S. Renewable Diesel Market Trends

• Increased Adoption of Advanced Technology: The renewable diesel market is observing a remarkable transition into the use of advanced production technologies. Co-processing with petroleum refineries, and development of new catalysts are some of the latest innovations to advance efficiency in production and quality of fuel. This presents a look at the general movement toward more effective and eco-friendly means of fuel production.
• Demands from the Transport Sector: There is an increasing demand for renewable diesel in transport, mainly because fleet operators are trying to reduce their emissions and to show compliance with the varying environmental regulations. This leads to an increase in the application of renewable diesel in fleets, heavy-duty vehicles, and public transportation.
• Diversifying Feedstock Sources: One of the primary emerging trends in renewable diesel production is diversification of feedstock sources. There is a rise in the use of waste oils, animal fats, and agricultural residues that decrease reliance on conventional feedstocks and make feedstock sources more sustainable. This trend is driven by demands to use renewable resources and reduce waste.
• Corporate Sustainability Initiative: Many companies are already undertaking corporate sustainability initiatives through the adoption of renewable diesel. The requirement to reduce carbon footprints and meet the set targets for sustainability has made renewable diesel deployable in various industries, hence driving demand for the market.
• Government and Regulatory Support: The growth of the renewable diesel market depends upon the continuous support of the government through policy and regulation. Incentives, subsidies, and renewables mandating the use of renewable fuel foster the investments being made and the adoption occurring that enable growth.

U.S. Renewable Diesel Market Dynamics

Drivers

Rising Incidence of Climate Change Concerns:

• The increasing awareness of climate change and its impact is a significant driver in the U.S. Renewable Diesel Market. The need to reduce greenhouse gas emissions and transition to cleaner energy sources is driving demand for renewable diesel as an alternative to conventional diesel fuel.

Supportive Regulatory Environment

• Government regulations and policies that promote renewable fuel usage are boosting the U.S. Renewable Diesel Market. Initiatives such as the Renewable Fuel Standard (RFS) and state-level programs provide incentives and mandates for renewable diesel production and consumption, encouraging market growth.

Restraints

High Production Costs

• The high production costs of renewable diesel remain a significant restraint. Advanced production technologies and feedstock procurement can be expensive, impacting the overall cost-effectiveness of renewable diesel compared to conventional diesel. This can limit market adoption, particularly in price-sensitive regions.

Feedstock Availability and Supply Chain Issues

• The availability and consistent supply of feedstocks for renewable diesel production can be a challenge. Competition for feedstocks such as waste oils and fats can drive up costs and create supply chain bottlenecks, affecting production and market stability.

Opportunities

Expansion of Production Capacity

• The expansion of renewable diesel production capacity presents a significant opportunity in the U.S. Renewable Diesel Market. Investments in new facilities and the conversion of existing refineries to produce renewable diesel can meet rising demand and support market growth.

Advancements in Feedstock Utilization

• Developing new technologies to utilize a broader range of feedstocks, including agricultural residues and algae, offers promising opportunities. Innovations in feedstock processing can enhance production efficiency and sustainability, driving market expansion.

Challenges

Regulatory Compliance and Standards

• Navigating complex regulatory requirements and maintaining compliance with evolving standards pose significant challenges for renewable diesel producers. Adhering to stringent environmental and fuel quality regulations can be resource-intensive and impact operational efficiency.

Integration of Emerging Technologies

• Integrating renewable diesel production and distribution with existing petroleum infrastructure can be challenging. Ensuring compatibility and efficiency in blending, storage, and transportation requires substantial investments and coordination, affecting market development.

U.S. Renewable Diesel Market Segment Analysis

Type Analysis

Biodiesel: Biodiesel is one of the most common forms of renewable diesel in the U.S. market, produced from vegetable oils, animal fats, and recycled cooking grease. It is used primarily as a blend with petroleum diesel to reduce emissions. The growth of the biodiesel segment is driven by its compatibility with existing diesel engines and infrastructure, along with federal mandates for renewable fuel usage.

Renewable Hydrocarbon Diesel (RHD): Renewable Hydrocarbon Diesel, also known as green diesel, is chemically identical to petroleum diesel and can be used in any proportion with conventional diesel. It is produced through advanced refining processes, such as hydroprocessing. The segment is gaining traction due to its higher energy content and lower emissions compared to traditional biodiesel.

Hydrogenation-Derived Renewable Diesel (HDRD): HDRD is produced through the hydrogenation of vegetable oils and animal fats, resulting in a product that is very similar to petroleum diesel. This type is favored for its performance and environmental benefits, including lower particulate emissions. The market for HDRD is expanding due to its suitability for use in existing diesel engines without modifications.

Feedstock Analysis

Soybean Oil: Soybean oil is a major feedstock for renewable diesel production in the U.S. due to its abundant availability and high oil content. It is primarily used in the production of biodiesel. The segment benefits from the well-established soybean agriculture industry in the U.S., providing a reliable supply chain for producers.

Animal Fats: Animal fats, including tallow and lard, are used in the production of renewable diesel, particularly HDRD. This feedstock is a byproduct of the meat industry, offering a cost-effective and sustainable source for diesel production. The use of animal fats is driven by their lower cost compared to vegetable oils and their high efficiency in fuel production.

Used Cooking Oil: Used cooking oil, or waste vegetable oil, is an increasingly popular feedstock due to its sustainability and lower cost. It is collected from restaurants and food processing industries and processed into renewable diesel. This segment is growing as more businesses and municipalities implement recycling programs for used cooking oil.

Application Analysis

Transportation: The transportation sector is the largest consumer of renewable diesel in the U.S., with significant usage in commercial fleets, public transportation, and personal vehicles. Renewable diesel's compatibility with existing diesel engines and infrastructure makes it an attractive option for reducing emissions in the transportation industry.

Industrial: Industrial applications of renewable diesel include its use in heavy machinery, agricultural equipment, and generators. The industrial segment benefits from renewable diesel's high energy content and cleaner-burning properties, which reduce maintenance costs and improve engine performance.

Power Generation: Renewable diesel is also used in power generation, particularly in backup and remote power systems. Its stable performance and lower emissions compared to petroleum diesel make it a preferred choice for power generation applications, contributing to market growth in this segment.

Service Analysis

Production Services: Production services encompass the various stages of renewable diesel manufacturing, including feedstock procurement, refining, and quality control. Companies offering production services play a critical role in ensuring the availability of high-quality renewable diesel in the market.

Distribution Services: Distribution services involve the transportation and delivery of renewable diesel from production facilities to end-users. Efficient distribution networks are essential for maintaining a steady supply and meeting the growing demand for renewable diesel across different regions.

Consulting Services: Consulting services provide expertise in areas such as regulatory compliance, feedstock selection, and process optimization. These services help businesses navigate the complexities of the renewable diesel market and implement best practices for production and usage.

Maintenance and Support Services: Maintenance and support services ensure the ongoing performance and reliability of renewable diesel production facilities and equipment. This includes routine maintenance, troubleshooting, and upgrades to production systems, ensuring continuous and efficient operations.

End-use Analysis

Industrial Manufacturing: Industrial manufacturing facilities use renewable diesel for various applications, including generators, boilers, and machinery. The sector benefits from the reliability and efficiency of renewable diesel, which supports continuous operations and reduces emissions. Increased awareness of corporate social responsibility and sustainability initiatives further drive the adoption of renewable diesel in manufacturing.

Government and Municipalities: Government agencies and municipalities are key end-users of renewable diesel, especially for public transportation fleets, emergency response vehicles, and municipal services. The use of renewable diesel aligns with government policies aimed at reducing greenhouse gas emissions and promoting the use of renewable energy sources. Incentives and mandates at the federal, state, and local levels encourage the adoption of renewable diesel in this segment.

Retail and Distribution Centers: Retail companies and distribution centers use renewable diesel for transportation and logistics operations, including delivery trucks and forklifts. This segment values renewable diesel for its environmental benefits and ability to help meet sustainability goals. The push towards green logistics and eco-friendly supply chain practices drives demand for renewable diesel in retail and distribution.

Energy Sector: The energy sector uses renewable diesel in power generation and backup power systems. Renewable diesel’s stability and lower emissions make it suitable for use in power plants, remote power systems, and emergency generators. The transition towards renewable energy sources and the need for reliable, cleaner fuel alternatives boost the demand for renewable diesel in this sector.

Hospitality and Leisure: The hospitality and leisure industry, including hotels, resorts, and recreational facilities, utilizes renewable diesel for operational needs such as backup generators and maintenance equipment. This sector prioritizes sustainable practices to appeal to environmentally conscious consumers and reduce operational emissions, driving the adoption of renewable diesel.

U.S. Renewable Diesel Market Top Companies

• Neste
• Renewable Energy Group (REG)
• Valero Energy Corporation
• Darling Ingredients
• Diamond Green Diesel
• Marathon Petroleum Corporation
• Phillips 66
• Chevron Corporation
• Andeavor
• World Energy
• Red Rock Biofuels
• Ryze Renewables
• Gevo, Inc.
• Global Clean Energy Holdings
• Flint Hills Resources

Among the new players, Ryze Renewables leverages advanced refining technologies to produce high-quality renewable diesel, aiming to increase production capacity and reduce carbon emissions. Red Rock Biofuels focuses on converting forestry and agricultural waste into renewable diesel, expanding its production capabilities through innovative feedstock utilization.

Dominating players like Neste and Renewable Energy Group (REG) drive market leadership through extensive production networks and high-quality fuel standards. Neste is known for its aggressive expansion strategy and integration of cutting-edge technology, while REG excels in operational efficiency and support services, enhancing the overall fuel performance and maintaining a competitive edge in the market.

CEO Statements

Benjamin Cowart, CEO of Vertex:

"Due to the significant macroeconomic headwinds over the past 12 months, many of which we believe will continue to occur over the next 18 months and potentially beyond, we have decided to strategically pause our renewable diesel business and pivot to producing conventional fuels."

Recent Developments

Key players in the U.S. renewable diesel industry have implemented diverse strategic initiatives to ensure continued growth, including mergers, collaborations, product development, and regional expansions. The recent surge in environmental regulations and the push for sustainable energy sources have driven significant changes in the market. Companies are now focusing on innovative technologies and expanding their production capacities to meet the growing demand for renewable diesel. Some notable examples of key developments in the U.S. renewable diesel industry include:

• In June 2024, BP agreed to acquire Bunge’s 50% stake in BP Bunge Bioenergia S.A. for $1.4 billion. This makes BP the sole owner, boosting its ethanol production capacity to 50,000 barrels per day across 11 units in Brazil. The deal aligns with BP’s financial goals and includes net debt of $0.5 billion and lease obligations of $0.7 billion. BP aims to leverage this acquisition for growth and to develop new bioenergy platforms like sustainable aviation fuel (SAF).
• In June 2024, The USDA reported that U.S. renewable diesel production growth is reshaping global feedstock trade, with the U.S. becoming a net importer of soybean oil in 2023 due to increased imports of animal fats and vegetable oils. Soybean meal exports have surged due to drought in Argentina.
• In March 2024, Chevron announced the shutdown of its biodiesel production facility in Texas, citing market conditions and strategic realignment efforts.
• In December 2023, HF Sinclair Corporation completed the acquisition of Holly Energy Partners L.P., enhancing its integrated energy portfolio and expanding its logistics and infrastructure capabilities.
• In November 2023, Neste partnered with Altens and MPS to sell and distribute Neste MY Renewable Diesel in France, expanding its market presence and promoting sustainable fuel solutions.

These strategic developments highlight a trend toward consolidation and technological innovation within the U.S. renewable diesel sector. Companies are broadening their service offerings and leveraging advanced technologies to enhance production efficiency and expand their market presence.

Market Segmentation

By Type

• Biodiesel 
• Renewable Hydrocarbon Diesel (RHD) 
• Hydrogenation-Derived Renewable Diesel (HDRD)

By Feedstock

• Soybean Oil 
• Animal Fats
• Used Cooking Oil

By Service

• Production Services 
• Distribution Services 
• Consulting Services 
• Maintenance and Support Services 

By Application

• Transportation 
• Industrial 
• Power Generation

By End-use

• Industrial Manufacturing 
• Government and Municipalities 
• Retail and Distribution Centers 
• Energy Sector 
• Hospitality and Leisure