Sylvie Willis
The price of biofuel varies depending on the region and the type of biofuel being considered. In the US, the price of B20 biofuel (a diesel blend with 20% biodiesel content) was $3.18 per gasoline gallon equivalent on 1 October 2024, while B100 sold for a mean retail price of $3.96. In Europe, biofuels have consistently been more expensive than fossil fuels, with bioethanol from EU production being twice as expensive as petrol. The price of biofuel is influenced by the cost of feedstocks such as vegetable oils, cereals, used cooking oil, and animal fats. The production of biofuel can also be profitable or loss-making, depending on various factors, with FAME biodiesel production in the US experiencing a rollercoaster of profits and losses during the renewable diesel boom years of 2021-2024.
| Characteristics | Values |
|---|---|
| B20 retail fuel price in the US | $3.18 per gasoline gallon equivalent |
| Regular diesel fuel price in the US | $3.24 per gallon |
| B100 retail price | $3.96 per gallon |
| FAME biodiesel production profit in the early part of the renewable diesel boom | Loss of $0.59 per gallon |
| FAME biodiesel production profit in the middle of the renewable diesel boom | Profit of $0.41 per gallon |
| FAME biodiesel production profit since mid-2023 | Loss of $0.19 per gallon |
| Biofuel price compared to fossil fuels in Europe | Twice as expensive |
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What You'll Learn
Biodiesel prices and profits
The behaviour of biodiesel prices has been monitored by various organisations, including the Agricultural Marketing Service (AMS) of the USDA and OPIS, a price reporting service. Before August 2021, the difference between the two was minimal, but after that date, the prices began to diverge, with OPIS prices rising far above AMS prices, by over $1.50 per gallon at times. This discrepancy led to a change in the average biodiesel profitability estimate, flipping it from strongly negative to positive.
However, it is important to note that OPIS prices represent wholesale transactions in Chicago, which may not accurately reflect the prices at Iowa biodiesel plants. To address this, another price reporting service, Fastmarkets, has been used to represent biodiesel prices at Iowa ethanol plants. Fastmarkets' prices are based on biodiesel FOB plant prices in a region that includes a significant number of Iowa biodiesel plants, providing a more accurate representation of plant-level prices during the volatile renewable diesel boom years.
In addition to price variations, the biodiesel industry also experiences substantial differences in capacity, production efficiency, and feedstock across plants. These factors can significantly impact profit estimates. For instance, marketing fees for biodiesel have increased due to inflation, rising from $0.10 per gallon in 2007 to $0.15 in 2023. Similarly, non-soybean oil/non-natural gas variable costs have also risen due to inflation, increasing from $0.25 per gallon in 2007 to $0.37 in 2023.
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Biofuel production costs
The cost of biofuel varies depending on the type of biofuel and the feedstock used. Feedstock costs are a significant factor in the overall price of biofuel production. For example, feedstock costs account for 35% of the total costs of advanced biofuel production, with hydrogenated esters and fatty acids pathways having the highest feedstock share of 66%.
The cost of producing a gallon of gasoline-equivalent (gge) of cellulosic ethanol averages $4, with estimates ranging from $1.15 to $7.85. The pyrolysis-biocrude-hydro treatment pathway for drop-in fuels has the lowest average production cost estimate at approximately $3.25/gge. Biomass-to-liquid (BTL) production cost estimates averaged $3.80/gge, while hydrotreated esters and fatty acids (HEFA) averaged about $3.70/gge.
The cost of biofuel production also depends on whether the biofuel is conventional or advanced. Conventional biofuels, such as starch and sugar-based ethanol and oilseed-based fatty acid methyl ester (FAME) biodiesel, have been extensively commercialized. In contrast, advanced biofuels are produced from non-food crops and are still far from commercialization.
The retail price of biofuel blends also varies. For example, in the United States, the mean retail price of B20 fuel (a diesel blend with 20% biodiesel content) was $3.18 per gallon of gasoline equivalent in October 2024, while B100 (100% biodiesel) sold for a mean retail price of $3.96 per gallon of gasoline equivalent during the same period.
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Biofuel consumption in the US
Biofuels are an important component of fuel consumption in the US transport sector. In 2022, about 17.6 billion gallons of biofuels were consumed in the US, with the largest share being ethanol—an alcohol fuel blended with petroleum gasoline for vehicles. That year, ethanol accounted for 75% of biofuel consumption in the US. The US government has implemented various policies and programs to promote and increase the consumption of biofuels, including the Volumetric Ethanol Excise Tax Credit, which was in effect from 2005 to 2011 and contributed to large increases in ethanol consumption. Currently, a tax credit of $1.00 per gallon for biodiesel and renewable diesel fuel blenders is in place, which is encouraging the use of biofuels.
The US produced about 18.7 billion gallons of biofuels in 2022, with ethanol production totaling about 15.4 billion gallons and biodiesel/renewable diesel production reaching around 3.1 billion gallons. Biodiesel, which is usually blended with petroleum diesel for consumption, accounted for 9% of US biofuel consumption in 2022. Renewable diesel, chemically similar to petroleum diesel fuel, accounted for 9% of consumption.
The capacity to produce biofuels in the US increased by 7% in 2023, reaching 24 billion gallons per year at the start of 2024. This increase was led by a 44% surge in renewable diesel and other biofuels, including renewable heating oil, jet fuel, naphtha, and gasoline. The US biofuels industry is expected to continue expanding due to state and federal tax incentives, regulatory policies, plant expansions, and new plant construction.
The mean B20 retail fuel price in the US was $3.18 per gasoline gallon equivalent on October 1, 2024, compared to $3.24 for regular diesel fuel. B20 fuel is a diesel blend with 20% biodiesel content, and the higher the biodiesel content, the more expensive the fuel. B100 fuel, with a higher biodiesel content, sold for a mean retail price of $3.96 in October 2024.
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Regional fuel prices
The price of biofuels varies across different regions and is influenced by several factors, including feedstock prices, supply and demand dynamics, logistical considerations, and government regulations. Here is an overview of biofuel prices in different regions:
North America
In North America, particularly the United States, the biodiesel market has experienced fluctuations due to rising feedstock prices and tightening supply. Increased demand for renewable fuels in the U.S., driven by government mandates and expectations for future growth in biofuel consumption, has contributed to rising biodiesel prices. Additionally, logistical challenges such as refinery shutdowns and transportation issues have further impacted prices. The market has also faced pressure from increasing costs of Renewable Identification Numbers (RINs) and expectations of upward price pressures in the coming months.
Asia
The biodiesel market in Asia, including Southeast Asian countries like Thailand, has been influenced by fluctuations in feedstock prices, particularly the high cost of crude palm oil. Thailand reduced the palm oil content in biofuel to control production costs, shifting from B7 to B5. However, retail biodiesel prices in Thailand remained high due to global feedstock price pressures and logistical challenges in other Southeast Asian countries, leading to price volatility in the region.
Europe
The European biodiesel market, including countries like France and Germany, has faced competition from low-price quoted biofuels allegedly produced from virgin oils. This prompted stricter EU regulations on biofuel imports in the second quarter of 2024. The U.S. biodiesel sector experienced downward pressure due to an excessive supply of renewable diesel production capacities during the same period. Strict government mandates and tax credits further impacted demand.
China and Indonesia
China and Indonesia are among the key regions with significant biofuel demand, accounting for a substantial portion of global transport fuel demand. Biofuel prices in these regions are influenced by market dynamics and policies. Biodiesel-blend fuel costs are expected to rise with higher blending levels and increasing feedstock prices, particularly in the United States and Indonesia.
It is important to note that the biofuel market is dynamic, and prices can vary over time due to various factors. The information provided here offers a snapshot of regional fuel prices and the factors influencing them.
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Biofuel vs fossil fuel costs
The cost of biofuel and fossil fuel varies depending on several factors, including location, time of year, and political climate. In general, biofuels tend to be more expensive than fossil fuels.
For example, in Europe, the rising price of feedstocks has made biofuels up to 130% more expensive than fossil fuels, adding approximately €17 billion to the continent's annual fuel bill. This is because the cost of feedstocks such as cereals, vegetable oils, used cooking oils, and animal fats has increased, which are necessary for the production of biofuels. Bioethanol from EU production, for instance, is twice as expensive as petrol.
In the United States, the price of B20 fuel (a diesel blend with 20% biodiesel content) was $3.18 per gasoline gallon equivalent on October 1, 2024, while regular diesel fuel was $3.24. The higher the biodiesel content, the more expensive the fuel, with B100 selling for a mean retail price of $3.96 in October 2024.
It is worth noting that alternative fuel fleets can often obtain lower fuel prices by entering into contracts directly with local fuel suppliers, rather than relying on the retail market. Additionally, as gasoline prices increase, alternative fuels become more appealing to vehicle fleet managers and consumers, even if the alternative fuels are more expensive.
While biofuels may currently be more expensive than fossil fuels, it is important to consider the potential long-term benefits of investing in renewable energy sources, such as reduced environmental impact and decreased reliance on finite resources.
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Frequently asked questions
The price of biofuel varies depending on its biodiesel content. In October 2024, B20 fuel—a diesel blend with 20% biodiesel content—cost $3.18 per gallon, while B100 fuel sold for $3.96 per gallon.
In recent years, biofuels have generally been more expensive than fossil fuels. For example, bioethanol from EU production is twice as expensive as petrol.
The price of biofuel is influenced by the cost of feedstocks used for its production, such as vegetable oils, cereals, used cooking oil, and animal fats.
Biofuel prices have fluctuated significantly in recent years. During the renewable diesel boom of 2021–2024, FAME biodiesel production profits experienced highs and lows, ranging from an average loss of $0.59 per gallon to a high average profit of $0.41 per gallon.
