CENTRAL ILLINOIS (WCIA) — Do you know what “California-cation” is? Well, it is the impact of California on the Illinois soybean industry. And it’s a good thing.
Bill Lapp is an economist who reported to the Illinois Soybean Association recently about the explosion in demand for renewable diesel fuel made from soybean oil. He calls it California-cation.
“It’s been part of California’s low carbon fuel standard, a program that started in 2010 and extends to 2030 and beyond,” Lapp said. “And it’s designed to reduce the carbon emissions in California from transportation fuels. There’s a variety of pathways to reach and one of the main ones, the biggest growing one right now is, renewable diesel.”
And soybeans are really the beneficiary of that demand.
“Absolutely,” Lapp said. “We’ve had a surge in growth in biofuel usage of soybean oil here in the U.S. and the growth has been almost entirely renewable diesel in the last two years.”
Demand for renewable diesel fuel was one billion gallons in 2021. What’s the projection for a few years from now?
“Capacity has been announced and expected to be built to increase that to four billion gallons,” Lapp responded. “But that may be difficult to achieve because of a lack of feedstock, of fats and oils to produce it.”
And so there’s not enough soybean oil to go around.
“There’s not enough soybean oil to meet all of the usage of food usage, and the renewable diesel and the biodiesel and the exports,” Lapp said.
But if this could happen, there’s certainly going to be a greater demand for soybean oil if it’s all going to be going into renewable diesel.
“Yes. A part of that demand will be met through expanded crush capacity,” Lapp said. “There’s going to be an increase in crush capacity somewhere in the order of 20 to 25 percent for the next couple years, its been announced. And we’re starting to get it. So that will be part of it because we crush those soybeans, and we’ll have an increase in supply and that will be used to meet that. And that goes for increased demand for U.S. soybeans.”