Come Clean, Part 5 - Why Everyone's Talking About Renewable Diesel

Renewable diesel is a popular topic in the transportation fuel space, and for good reason. For one, RD provides a lower-carbon, renewable-based alternative to petroleum-based diesel; for another, it’s a chemical twin of and therefore a “drop-in” replacement for ultra-low sulfur diesel. But, most of all, there are the large financial incentives provided by California’s Low Carbon Fuel Standard, the U.S. Renewable Fuel Standard, the U.S. Biodiesel Tax Credit, and other programs, which can make RD production highly profitable. Driven by these factors, there’s a lot of renewable diesel production capacity under construction or on the drawing board: everything from greenfield projects to expansions of existing RD refineries to conversions of old-school refineries so they can make RD. Today, we put the spotlight on RD and discuss how it differs from biodiesel, how it’s produced, and the new RD capacity coming online in North America.

Our blog series on low carbon fuel policies in the U.S. and Canada has garnered a lot of attention. There’s no doubt about it, energy folks want to learn all they can about alternative fuels, including the impact that low carbon fuel standard (LCFS) programs could have on refined products markets. To quickly recap what we’ve said so far, in Part 1 we provided an overview of various policies that have been adopted to reduced greenhouse gas (GHG) emissions from the transportation sector, such as fuel economy standards, renewable blending requirements, zero emission vehicle mandates, and LCFS programs in locations such as California, Oregon, British Columbia, and Canada generally via its Clean Fuel Standard.

In Part 2, we focused on California’s LCFS, which was implemented in January 2011 and which grew out of a number of earlier efforts there to improve air quality and, more recently, reduce GHG emissions. The LCFS assigns a carbon intensity (CI) target value for petroleum-based gasoline and diesel fuels, as well as their substitutes, such as ethanol, biodiesel, and renewable diesel. (CI is an assessment of the GHG emissions associated with producing, distributing, and consuming a fuel, and is measured in grams of carbon dioxide equivalent per megajoule, or gCO2e/MJ.) The LCFS then sets maximum CI limits on finished gasoline and diesel fuel consumed in California each year on a gradually declining scale to meet the 2030 goal of a 20% reduction in the carbon intensity of motor fuels consumed in the state.

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