University of Illinois Department of Agricultural and Consumer Economics
Biodiesel prices skyrocketed during the first phase of the renewable diesel boom, reaching an all-time high (since 2007) of $7.90 per gallon in late April 2022, according to this chart from the report "The Biodiesel Profitability Squeeze." Prices have since tumbled precipitously, all the way back to $4 per gallon.
A new report from the University of Illinois details how spikes in production of renewable diesel may be driving down the profitability of another “green” fuel used by diesel-powered construction equipment: biodiesel.
Using a model of a representative Iowa biodiesel plant, “The Biodiesel Profitability Squeeze” suggests that rising competition from renewable diesel has “squeezed substantially” biodiesel production profits. The report was authored by the university’s Department of Agricultural and Consumer Economics.
Over the time span of 2007-2020, the average profit for biodiesel for the representative plant was $0.07 per gallon, according to the report. The average plunged to -$0.27 per gallon over 2021-2023 (to date). The magnitude of the average loss during the renewable diesel boom was nearly quadruple the average gain before the boom.
The authors suggest that such losses could cause biodiesel facilities to close down, citing a 17-percent decline in capacity from 2.461 billion gallons in October 2021 to 2.051 billion gallons in January 2023.
Sutton has served as the editorial lead of Construction Equipment magazine and ConstructionEquipment.com since 2001.
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