Louisiana Could Supplant California as SAF Leader

A new report from energy market intelligence provider Industrial Info Resources argues that Louisiana, which has long been a leader in fossil fuel production, could soon outpace California as the leader in renewable fuel production in the U.S.

According to the company’s data, Louisiana currently trails the Golden State in terms of renewable diesel and sustainable aviation fuel (SAF), which both share similar production processes. While Louisiana has a capacity of 1.3 billion gallons a year, compared to California’s 1.75 billion, the Bayou State’s planned production projects would outstrip the latter’s, bumping it up to more than 3.2 billion gallons annually, while the projected additional capacity in California would bring it to just less than 2 billion gallons.

One factor in the shift could be Louisiana’s increase in permitting for carbon capture, usage, and storage (CCSU) wells. In 2023, the state’s Department of Energy and Natural Resources was given permission to process and issue permits for CCUS wells, which allow deep sequestration of carbon dioxide, instead of the U.S. Environmental Protection Agency.

“The state has many types of secure geologic formations for storage, so that's a great start,” said Hillary Stevenson, Industrial Info's v-p of energy intelligence. “It has oil and gas fields which could benefit from enhanced oil recovery (EOR) carbon sequestration and other industries that could utilize captured carbon dioxide.”

Another factor is the status of clean fuel production credits under Section 45Z of the U.S. Tax Code, which spurred industry growth in California and other states, in conjunction with local tax incentives. The credits for 45Z will expire in 2029; however, different tax incentives exist under Section 45Q, specifying the use of CCUS in production. Those will remain in place for 12 years, as long as construction on the production project begins by 2033.