Louisiana is on track to become the leading U.S. state for renewable diesel (RD) and sustainable aviation fuel (SAF) production, supported by expanding carbon capture infrastructure and favourable permitting for carbon storage projects, according to Industrial Info Resources.
While Louisiana has long been a major producer of oil and natural gas, the state is rapidly expanding its renewable fuels industry. Industrial Info Resources data shows Louisiana currently has 1.3 billion gallons per year of operational renewable diesel and sustainable aviation fuel capacity, second only to California’s 1.75 billion gallons, Industrial Info Resources reported.
However, if all planned projects are completed, Louisiana’s production capacity is expected to increase to 3.2 billion gallons per year, surpassing California’s projected 1.9 billion gallons.
Industrial Info Resources Vice President of Energy Intelligence Hillary Stevenson said one factor behind Louisiana’s growth is its leadership in permitting Class VI wells used for carbon capture, utilisation and storage (CCUS).
In December 2023, Louisiana received Class VI primacy, allowing the Louisiana Department of Energy and Natural Resources to process and issue permits for carbon storage wells instead of relying on the U.S. Environmental Protection Agency. The move has enabled the state to speed up approvals for CCUS projects.
According to Stevenson, another driver is the different timelines for U.S. federal tax incentives supporting clean fuel production and carbon capture.
She noted that clean fuel production credits under Section 45Z of the U.S. Tax Code are scheduled to expire in 2029. Producers are therefore expected to increasingly rely on Section 45Q tax credits for carbon capture projects, which remain available for up to 12 years, provided qualifying projects begin construction by 2033.
Stevenson said renewable fuel producers cannot claim both incentives simultaneously but can shift from the 45Z production credit to the 45Q carbon capture credit once the former expires, making states with faster CCUS permitting more attractive for investment.
She added that Louisiana also benefits from suitable geological formations for long-term carbon storage, existing oil and gas fields that can support enhanced oil recovery using captured carbon dioxide, and industries capable of utilising captured COâ‚‚.
Industrial Info Resources said these advantages are helping position Louisiana as a preferred destination for new renewable diesel and sustainable aviation fuel projects.
The state’s progress was highlighted in late June when Strategic Biofuels announced it had received Louisiana’s first Class VI permit for multiple carbon storage wells from the Louisiana Department of Energy and Natural Resources. The company said the permit would significantly advance its Louisiana Green Fuels project in Caldwell Parish.
