In January 2023, U.S. production capacity of renewable diesel and other biofuels reached 3 billion gallons per year, surpassing U.S. biodiesel production capacity for the first time. Rising targets for state and federal renewable fuel programs and the renewal of biomass-based diesel tax credits are driving this growth in U.S. renewable diesel capacity.
We began collecting data about U.S. capacity of renewable diesel and other biofuels in 2021. Since 2021, renewable diesel and other biofuels production capacity has more than tripled in the United States. Over the same period, biodiesel capacity has declined 13%. Renewable diesel is a fuel that is chemically equivalent to petroleum diesel and nearly identical in its performance characteristics. The same is not true of biodiesel, which is chemically different from petroleum diesel.
Between January 2022 and January 2023, the U.S. production capacity for producing renewable diesel and other biofuels increased by 1.25 billion gallons per year, a 71% increase from 2022. In January 2023, 11 states reported sites with renewable diesel and other biofuels production capacity, up from 6 states in 2022. An example of a state with new and growing capacity is Texas, which had no renewable diesel and other biofuels capacity in January 2022. By January 2023, Texas had 537 million gal/y of capacity, the second highest after Louisiana. Unlike ethanol and biodiesel, where states in the Midwest hold most of the national capacity, more than 60% of U.S. renewable diesel and other biofuels production capacity is on the Gulf Coast.
Biodiesel now accounts for the smallest share of U.S. biofuels capacity, 2.1 billion gal/y in January 2023, among the three categories we track. Biodiesel capacity declined by 169 million gal/y from January 2022 to January 2023. The Midwest has 70% of U.S biodiesel capacity, which is primarily in Iowa, Missouri, Illinois, and Indiana.
Fuel ethanol producers in the Midwest continue to hold the most capacity in the U.S. biofuels market. Fuel ethanol capacity increased by 283 million gal/y between 2022 and 2023. More than 90% of U.S. ethanol capacity is in the Midwest, where the feedstocks for ethanol (primarily, corn) are grown, mainly in Iowa, Nebraska, Illinois, and South Dakota.
On August 7, we updated three of our biofuels reports: our 2023 Fuel Ethanol Plant Production Capacity Report, 2023 Biodiesel Plant Production Capacity Report, and 2023 Renewable Diesel Fuel and Other Biofuels Plant Production Capacity Report. These reports contain our most up-to-date estimates of plant production capacity for the U.S. biofuels industry. The reports include biofuels production capacity for operating plants as of January 1, 2023, with the names of the reporting plants organized by state and region.
