US biodiesel imports have doubled from 2022 due to low prices in Europe

In-depth analysis

May 28, 2024

According to the most recent data available, annual biodiesel imports to the United States doubled in 2022–2023 to 33,000 barrels per day (b/d) and continued to increase in the first two months of 2024. Much of the increase in biodiesel imports comes from Germany, with the remaining increase coming from mainly from other parts of Europe, where a surplus of biodiesel has driven down prices.

How much biodiesel was the United States importing before the recent increase?

US imports of biodiesel – a transportation and heating fuel typically blended with diesel or heating oil – averaged 12,000 barrels per day from September 2017 to October 2022.

The US Renewable Fuel Standard program supports demand for biodiesel in the United States. In the first years of the program, which was introduced in 2005, required blending volumes of renewable fuels such as biodiesel were very low and imports were minimal. As the program matures, biofuel blending requirements gradually increase, leading to an increase in biodiesel consumption, imports, and production.

Annual U.S. biodiesel imports increased to 27,000 barrels per day from 2013 to 2017 due to subsidized biodiesel from Argentina and Indonesia. In response to these subsidies and increased imports, the U.S. Department of Commerce and the International Trade Commission initiated trade investigations in April 2017, resulting in antidumping and countervailing duty orders imposing duties on biodiesel imports from these countries to offset the effects of the subsidies. Because imports from Argentina and Indonesia accounted for almost three-quarters of total U.S. biodiesel imports from 2013 to 2017, U.S. biodiesel imports decreased significantly following the investigation and injunctions.

How much biodiesel has the United States imported recently?

The recent surge in U.S. biodiesel imports began in November 2022, when biodiesel imports reached 30,000 barrels per day. US biodiesel imports continued to increase in 2023, reaching 33,000 barrels per day, and increased further in 2024. In February 2024, the United States imported 54,000 barrels of biodiesel per day, the most in any month since June 2017.

Why has biodiesel import increased?

US biodiesel imports have increased mainly due to low biodiesel prices in Europe, which have made biodiesel imports from Europe economically attractive. Biodiesel prices in Europe are low due to policies related to the EU’s Renewable Energy Directive, which sets renewable energy targets.

The updated Renewable Energy Directive (RED II) has limited the share of biofuels in Europe’s renewable energy target for transport to 7%, although each EU member state implements its own regulations. Many EU member states allow advanced biofuels, which the EU defines as biofuels produced from used cooking oil or other specified feedstocks, to count twice for blending purposes.

Increased EU biodiesel imports from China, increased use of renewable diesel instead of biodiesel to meet EU blend targets, and reduced biofuel targets have contributed to lower biodiesel prices in Europe:

Data source: Vortex

Increased use of renewable diesel: As RED II and EU Member States’ regulatory programs do not distinguish between renewable diesel and biodiesel, renewable diesel can be used instead of biodiesel to achieve blending targets. Renewable diesel is fully interchangeable with petroleum diesel. It can be added to diesel in any quantity, unlike biodiesel, which has stimulated production growth in recent years that has brought many EU countries closer to the EU’s total biofuel limit of 7%.

Biofuel target reductions: Some EU Member States have reduced biofuel targets in response to high inflation. The most noticeable of these target cuts occurred in Sweden, which previously set more ambitious targets than required by the EU. In 2023, Sweden announced that it would reduce the required share of biofuels in diesel fuel from 30.5% to 6.0% between 2024 and 2026. In addition to Sweden, other EU Member States have implemented various measures to reduce the demand for, and therefore consumption of, biodiesel in Europe.

As biofuel margins have tightened in Europe, some biofuel producers have turned to the United States for higher prices. U.S. biodiesel imports began to increase in late 2022 as prices for regulatory compliance credits, known as renewable identification numbers (RINs), reached near record highs and biodiesel prices in Europe began to decline. As biodiesel prices continued to decline in Europe in early 2023, U.S. RIN prices remained relatively high. Although RIN prices have declined since mid-2023 to a three-year low in 2024, the increase in flows from Europe to the United States indicates that biodiesel in the United States continues to trade at a higher price than biodiesel in Europe.

Where did the United States increase its imports?

Much of the growth in U.S. biodiesel imports comes from Germany. In 2022–2023, U.S. biodiesel imports from Germany more than doubled to 11,000 barrels per day, making Germany the top source of U.S. biodiesel imports. Most of the remaining increase in U.S. biodiesel imports came from Spain, Italy and Belgium, with small increases also coming from South Korea and Brazil.

Data source: United States Energy Information Administration, Monthly supplies of crude oil
Note: Most imports from other countries go to South Korea and Brazil.

The distribution of US biodiesel imports reflects production in these countries. Germany produces significantly more biodiesel than any other country in Europe and imports it in second place. Spain, Italy and Belgium are also biodiesel producing countries and major exporters of biodiesel.

The distribution of imported U.S. biodiesel also reflects the geographic spread of biofuel companies benefiting from arbitrage opportunities. For example, company-level import data shows that Archer-Daniels-Midland (ADM) – a multinational agro-processing and commodity trading company with biodiesel plants in Germany, Canada, Brazil and the United States – was the record importer for most imports biodiesel from the US from November 2022, including all biodiesel from Germany. ADM owns an export terminal in Hamburg, Germany, connected to the largest oilseed processing plant in Europe. The terminal is the source of all U.S. biodiesel imports from Germany since 2022, according to Vortexa tanker tracking data.

How have imports affected biodiesel production and consumption in the United States?

Despite rising imports and increased competition from renewable diesel production, U.S. biodiesel production increased 5% in 2023 compared to 2022. Due to rising imports and domestic production, the U.S. consumed more biodiesel in 2023 than in any year since 2017 .

However, we forecast a decline in U.S. biodiesel production in 2024 as we assume blending margins will be lower than in 2023, mainly due to lower RIN prices. While the main reason for our assumption of lower RIN prices and blending margins is increased renewable diesel production, high biodiesel imports are also a significant factor.

While we do not explicitly forecast biodiesel imports, we do forecast net imports of biodiesel into the U.S. (imports minus exports). We forecast that net imports of biodiesel in 2024 will be approximately the same as in 2023 due to high imports at the beginning of the year and continued reduced demand in Europe. However, we expect net imports to stabilize during the year as rising renewable diesel production increases domestic biofuel supply.

Main collaborator: Jimmy Troderman