U.S. Biofuel Capacity Growth Slows in 2024
The pace of capacity additions for U.S. biofuel production slowed sharply in 2024. According to the latest Energy Information Administration (EIA) reports, production capacity increased by only 3% from the start of 2024 to early 2025. The report covers every category of renewable diesel, biodiesel, and sustainable aviation fuel (SAF) production in the country.
EIA analysts said the slowdown was most noticeable in the renewable diesel and other biofuels category. Those two segments accounted for most of the reduced expansion seen last year. The “other biofuels” category includes sustainable aviation fuel (SAF), renewable naphtha, and renewable propane, which together make up virtually all additional biofuel types currently produced in the United States.
Renewable Diesel and Other Biofuels See Limited Growth
California Projects Dominate 2024 Capacity Additions
The EIA reported that renewable diesel and other biofuels production capacity rose by 391 million gallons per year (gal/y) in 2024. That increase was less than one-third of the growth recorded in 2022 and 2023. Only two projects came online during the year, both located in California: the Phillips 66 Rodeo refinery conversion and a new Renewable Fuels LLC facility in Bakersfield.
The Rodeo refinery underwent a complete conversion to produce only biofuels. Following the conversion, the plant’s capacity grew from 180 million gal/y to 767 million gal/y. This change elevated it to the second-largest renewable diesel facility in the United States, surpassed only by Diamond Green Diesel’s 982-million-gal/y plant in Norco, Louisiana.
However, those gains were partly offset by the loss of production capacity at four facilities nationwide. Monroe Energy and Chevron discontinued renewable diesel co-processing at their Trainer, Pennsylvania, and El Segundo, California, refineries. In addition, Vertex Energy closed its plant in Mobile, Alabama, and Jaxon Energy shut down operations in Jackson, Mississippi.
EIA Data Sources and Market Forces Behind the Shift
Economic Margins and Refining Trends Drive Decisions
According to the EIA’s 2025 Fuel Ethanol Plant Production Capacity Report, 2025 Biodiesel Plant Production Capacity Report, and 2025 Renewable Diesel Fuel and Other Biofuels Plant Production Capacity Report, these changes reflect broader market forces that have evolved since 2020.
The loss of renewable diesel capacity at several facilities corresponds to fluctuating biofuel and petroleum refining margins. During 2020 and 2021, low refinery margins combined with high biofuel credit values spurred a wave of renewable diesel announcements. Companies rushed to convert or expand refineries to take advantage of the favorable economics.
As new plants entered production, the balance shifted. Biofuel output began to exceed Renewable Fuel Standard (RFS) target volumes, and both biofuel credit values and profit margins declined throughout 2023. Meanwhile, petroleum refinery margins strengthened from their 2020 lows. Those conditions prompted many refiners to slow or postpone investment in new renewable diesel projects in 2024 and beyond.
Sustainable Aviation Fuel Emerges as a Priority
Refineries Shift Output Toward SAF
A notable trend in 2024 was the increased focus on Sustainable Aviation Fuel (SAF), a renewable jet fuel alternative included in the “other biofuels” category. SAF, along with renewable heating oil, renewable gasoline, renewable naphtha, and renewable propane, represents the next phase of biofuel diversification.
The EIA groups SAF with renewable diesel because both are typically produced in the same facilities, either as byproducts or as replacement outputs when production lines shift from renewable diesel to SAF.
Following completion of the conversion projects in 2024, Phillips 66’s Rodeo plant gained the flexibility to shift about 150 million gal/y of renewable diesel capacity to SAF production. Likewise, Diamond Green Diesel’s Louisiana plant can divert approximately 235 million gal/y to SAF.
These capacity adjustments reflect the growing recognition that SAF offers significant growth potential as the aviation industry faces rising carbon reduction mandates and seeks scalable low-emission fuel options.
Biodiesel Capacity Contracts While Ethanol Expands
Biodiesel Declines Due to Tight Margins
Alongside renewable diesel’s slowdown, the U.S. biodiesel industry also contracted in 2024. EIA data showed that eight biodiesel plants closed during the year because of poor margins, eliminating about 100 million gal/y of capacity. This marks one of the largest single-year declines in biodiesel history and underscores how volatile feedstock prices and weaker Renewable Identification Number (RIN) values have pressured profitability.
Fuel Ethanol Growth Outpaces Other Biofuels
In contrast, fuel ethanol capacity expanded more in 2024 than in the prior two years combined. Ethanol now accounts for 73% of total U.S. biofuels capacity, reaching nearly 18.5 billion gal/y. Most ethanol plants remain concentrated in Midwestern states, particularly Iowa, Nebraska, Illinois, and Minnesota, where corn serves as the dominant feedstock.
Although domestic ethanol consumption has stayed relatively stable, the EIA said the new capacity primarily supports export growth. Foreign demand—especially from Canada, Brazil, and Asia—continues to drive shipments of U.S. ethanol as global markets seek lower-carbon fuel blending components.
Biofuel Industry Outlook for 2025
EIA analysts expect modest capacity growth to continue in 2025, particularly for SAF and renewable diesel projects already under construction. Future expansion will depend heavily on policy support, including federal tax credits under the Inflation Reduction Act, and on global demand for low-carbon transportation fuels.
While the sector’s 2024 slowdown reflects near-term market corrections, the long-term outlook for biofuels in the U.S. energy transition remains positive, driven by ongoing technology advances and federal decarbonization targets.