They’re generally small in size, but renewable diesel refineries are popping up in many parts of the U.S., incentivized by government programs aimed at reducing carbon emissions and very gradually weaning Americans — and Canadians — from crude oil-based diesel fuel. Recently, HollyFrontier Corp. announced that it will be converting its decades-old Cheyenne, WY, refinery into a renewable diesel facility. While the news of another entrant into the renewable diesel market is not surprising, the complete shutdown and transformation of an existing refinery for this purpose marks only the second time this has occurred in the U.S. Today, we discuss HollyFrontier’s plans and provide an update on renewable diesel supply and demand dynamics.
The production and consumption of renewable diesel have taken off in recent years due to regulatory incentives that encourage its use. In December, we wrote an article (Playin' by the Rules) that covered a lot of the background on renewable diesel, including an explanation of what it is, the regulatory programs that make its manufacture and import profitable, and a listing of the announced projects as of that point in time. (If you would like to hear more details on technology applications and other key points, Baker & O’Brien recently uploaded a webinar on the topic). Here are the most salient points:
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