Driver's Seat, Encore Edition - Built-In Advantages Help Drive Shift To Renewable Diesel

The U.S. is poised for a massive build-out in renewable diesel production capacity — a boom spurred by capacity rationalization amongst traditional refineries, increasingly supportive government policies, and a big push by ESG-minded refiners wanting to reduce the carbon footprint of their operations. It also hasn’t hurt that while renewable diesel is produced from used cooking oil, tallow, and other renewable feedstocks, it meets or exceeds the fuel specifications of traditional ultra-low sulfur diesel and thus is considered a “drop-in” replacement for ULSD — there’s no “blend wall” that limits its use. In today’s RBN blog, we discuss highlights from our new Drill Down report, which looks at why renewable diesel is a hot topic, what we can learn from California’s Low Carbon Fuel Standards program, and how much new renewable diesel capacity is in the works.

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.

Countries around the world are formulating and refining their strategies to reduce greenhouse gas emissions. Their policies target numerous areas such as stationary emissions, electricity production, and transportation. Within the transportation sector, one aspect that has spurred quite a bit of investment relates to reducing the carbon intensity of transportation fuels. The low-carbon fuel policies that are in place today, coupled with those being evaluated for the future, have the potential to incentivize the development of a wide range of “greener” alternatives to petroleum-based fuels in the regions where they are adopted. In today’s RBN blog, we discuss highlights from Part 2 of our Drill Down report on low-carbon fuels, focusing this time on ethanol, biodiesel, sustainable aviation fuel, and hydrogen, and the government policies that help support them.