By Laura Sanicola

(Reuters) – The U.S. biofuel and refiner companies will likely reach less than half of the 2025 renewable diesel production projections by the U.S. government, according to a Tuesday study from Cerulogy. This is due to feedstock and policy constraints.

Numerous North American oil refiners plan to turn facilities that process vegetable oils and other waste into renewable fuels. There is an emerging market for this type of energy, supported by incentives.

According to the Energy Information Administration, renewable diesel production in America could grow fivefold between now and 2024. It is estimated that it will go from approximately 1 billion gallons annually to over 5 billion by 2024.

Cerulogy said that projects would likely yield around 2 billion gallons in total renewable diesel capacity. Therefore, at least 2 million gallons already planned capacity expansions will likely be downsized, delayed or canceled.

According to Chris Malins (author of the International Council on Clean Transportation report), it would be difficult to achieve EIA forecasts. It would also require heavy reliance on imports for feedstocks.

According to EIA, it would take 1.3 million gallons more feedstock to meet EIA’s forecasts. The increase could be achieved by diverting oil and fats from conventional biodiesel production, increasing U.S. oil production, or increasing U.S. vegetable oil exports.

Although the fuel reduces greenhouse gases significantly when compared to petroleum diesel, there are concerns that the higher demand for oil to make it could result in land use changes and increase food prices.

Malins stated that a 2 billion-gallons annual production of renewable diesel in 2025 would be a high estimate of what is possible without creating market distortions.

Additionally, the policies intended to promote renewable diesel don’t work well enough. Renewable diesel growth can be achieved through policies like the U.S. Renewable Fuel Standard or state policies, such as California’s Low Carbon Fuel Standard.

Malins said that the U.S. Environmental Protection Agency had highlighted the danger of adverse market and environmental effects if more biomass-based fuel diesel was added.