Donnell Rehagen, CEO of the National Biodiesel Board and other experts predict continued growth for the biodiesel market in the U.S. (Photo: Joseph L. Murphy/Iowa Soybean Association)
Soy is preferred feedstock in biodiesel production
January 21, 2021 | Bethany Baratta
As states work toward low carbon fuel standards and reducing their carbon footprint, biodiesel is a solution that is readily available. And as soon as states catch on that biodiesel is an immediate solution, more soybean oil will be demanded as the primary feedstock for biodiesel production.
This was a main message during the National Biodiesel Board’s (NBB) virtual conference this week.
At last year’s conference, NBB CEO Donnell Rehagen introduced Vision 2020, the industry’s plan to grow the biodiesel and renewable diesel industries by more than 6 billion gallons by 2030 and 15 billion gallons by 2050.
NBB modeling suggests that a 6-billion-gallon industry in 2030 will demand over 18 billion pounds of soybean oil each year.
How will that be possible if domestic soybean crush remains around 24 billion pounds a year?
Continued global protein demand will lead to increased fats and oils in the market, which also contribute as feedstocks to biodiesel production. But what about soybean oil?
Rehagen says part of the increase could come through a wider use of oilseed cover crops.
“We know that commercializing new crops is not an easy task and doesn’t happen overnight, but given the push to reduce carbon, oilseed production through cover crops could add as much as a billion gallons of oil to the equation,” Rehagen said.
Despite the decrease in fuel consumption in 2020 largely due to COVID-19, the biodiesel industry saw an increase in production as more heavy-duty trucks relied on biodiesel to haul things like food products and supplies across the country.
The Energy Information Administration reports that through October 2020, domestic soybean oil disappearance for use in biodiesel was up 11.3% from 2019 and up 14.6% from 2018.
Soybean oil was again the feedstock of choice for biodiesel producers in the United States in 2020, noted Matt Herman, director of environmental science for NBB.
“U.S. soy oil is becoming more widely used primarily because of its high availability, affordability, and more consistent properties than many other lipids,” Herman said.
He looks for soybean oil to continue to be the feedstock of choice for blenders as low carbon fuel standards are implemented in states and in corporate offices.
With increased demand for soybean oil for biodiesel production, what do soybeans of the future look like?
Reid Rice, a research scientist for Corteva, says yield remains king, but the increased demand for protein and oil must also be considered in breeding programs.
“It’s critical that we don’t sacrifice other value components knowing the demand that exists globally for both oil and meal,” Rice says.
The recent World Agriculture Supply and Demand Estimates (WASDE) report squeezed soybean supplies, boosting prices for soybean oil. Will blenders back off of soybean oil in favor of a lower-cost feedstock?
Soybean oil, at 41 to 42 cents per pound isn’t the highest blenders have seen, says Mac Marshall, vice president of market intelligence for USB. Between 2011 and 2013, blenders saw soybean oil in the 48 to 50 cent-per-pound range.
Increased demand will likely also bump up costs of other feedstocks, noted John Jansen, vice president of strategic partnership for USB.
“Soybean oil, even at higher price levels, is still the preferred feedstock,” Jansen says.