Annual US biodiesel imports doubled from 2022 to 2023 to 33,000 barrels per day (b/d) and continued to increase in the first two months of 2024, according to the most recent data available. Much of the increase in biodiesel imports came from Germany and Spain, and the remaining increase came mainly from other parts of Europe, where a surplus of biodiesel has lowered prices.
US biodiesel imports averaged 12,000 b/d between September 2017 and October 2022, with biodiesel imports reaching 30,000 b/d as of November 2022. US biodiesel imports continued to grow in 2023 to 33,000 b/d and have increased further in 2024. In February 2024, the United States imported 54,000 b/d of biodiesel, the most for any month since June 2017.
Biodiesel imports from the United States have increased primarily due to low biodiesel prices in Europe, which has made importing biodiesel from Europe economically attractive. Biodiesel prices in Europe have been low due to policies related to the EU Renewable Energy Directive, which drives renewable energy targets.
An updated Renewable Energy Directive (RED II) capped the biofuel portion of the European renewable energy target in transport at 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 toward blending targets.
Increased imports of biodiesel into the EU from China, increased consumption of renewable diesel instead of biodiesel to meet EU blending targets and lower biofuel targets have all contributed to lower biodiesel prices in Europe:
Increase in imports from China: Biodiesel imports to Europe from China increased by about 60% from 2021 to 2022 and almost 20% in 2023, according to tanker tracking data Vortexa. Although China’s biodiesel imports (around 14,000 b/d in 2022 and 16,000 b/d in 2023) do not represent a large proportion of Europe’s biodiesel consumption, they have a huge impact because China’s biodiesel is produced from used cooking oil, which makes biodiesel eligible for double counting in the targets of many EU member states. As more biodiesel is counted twice towards RED II targets, the total volume of biodiesel needed to meet needs decreases.
Rising imports from China and their potential effects on biodiesel prices and blending margins in Europe have sparked an anti-dumping investigation related to biodiesel imports from China and a countervailing duty investigation against Indonesia, which is suspected of evading existing EU tariffs by sending products through China and Britain.
Greater consumption of renewable diesel: Because RED II and the regulatory programs of EU member states do not differentiate between renewable diesel and biodiesel, the consumption of renewable diesel instead of biodiesel can be used to meet blending targets. Renewable diesel is completely interchangeable with petroleum diesel. It can be blended with diesel in any quantity, unlike biodiesel, spurring production growth in recent years that has brought many EU countries close to the EU’s total 7% biofuel limit.
Biofuel target reductions: Some EU member states have cut biofuel targets in response to high inflation. The most notable of these target cuts came in Sweden, which previously had more ambitious targets than the EU required. In 2023, Sweden announced that it would reduce the required proportion of biofuels in diesel for the period 2024-26 from 30.5% to 6.0%. In addition to Sweden, other EU member states have implemented various measures to reduce biodiesel needs and therefore consumption in Europe.
As biofuel margins have tightened in Europe, some biofuel producers have looked to the United States for higher prices. U.S. biodiesel imports began to rise in late 2022, when prices for compliance credits known as renewable identification numbers (RINs) were near record levels and biodiesel prices in Europe began to decline. As biodiesel prices in Europe fell further in early 2023, RIN prices in the US remained relatively high. Although RIN prices have declined since mid-2023 to reach three-year lows in 2024, increasing flows from Europe to the United States indicate that biodiesel in the United States is still selling at a premium to biodiesel in Europe.
Where does the increase in US imports come from?
Much of the increase in U.S. biodiesel imports came from Germany. From 2022 to 2023, US imports of biodiesel from Germany more than doubled to 11,000 b/d, making it the largest source of US 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.
The distribution of biodiesel imports from the United States reflects production in those countries. Germany produces significantly more biodiesel than any other country in Europe and is the second largest importer. Next is Spain and, further away, Italy and Belgium are also producing countries and major exporters of biodiesel.
The distribution of US biodiesel imports also reflects the geographic footprint of biofuel companies taking advantage of arbitrage opportunities. For example, company-level import data show that Archer-Daniels-Midland (ADM), an international agricultural processing and commodity trading company with biodiesel plants in Germany, Canada, Brazil and the United States, has been the importer of record for most of the year. US biodiesel imports from November 2022, including all biodiesel from Germany. ADM owns an export terminal in Hamburg, Germany, connected to its oilseed processing plant, which is the largest in Europe. This terminal has been the source of all US biodiesel imports from Germany since 2022, according to Vortexa tanker tracking data.
