Renewable Diesel is a Game Changer for Sustainable Aviation and Low Carbon Fuel Markets in the U.S., Canada, Europe and Southeast Asia

By Will Thurmond, President & CEO, Emerging Markets Online

Special to The Digest

According to a new study by market research firm Emerging Markets Online, renewable diesel is becoming a game changer for several key areas of the low carbon fuels industry, including:

(1) the global aviation industry, representing a 90 billion gallon/yr market and opportunity,

(2) U.S. west coast markets for LCFS programs in California, Oregon, Washington and British Columbia, representing approximately 5 billion gallons/year in low-carbon diesel demand,

(3) the utilization of sustainable, waste-based feedstocks from fats, oils, greases, agricultural residues, municipal solid waste, and dedicated energy crops for low-carbon transport fuels,

(4) conversions of petroleum refineries into low-carbon biorefineries to produce multiple products, including: renewable diesel, renewable naphta, bio-jet fuels, bio-based marine diesel fuels, and bio-based plastics.

By the year 2030, Emerging Markets Online’s study Renewable Diesel 2030: Low Carbon Fuels for Air, Land and Sea, estimates global renewable diesel production will increase four-fold from a current capacity of 4.8 Million tons per year in 2019 to 19.7 Million tons. This rapid expansion of renewable diesel fuels is being driven by strong demand incentives for low carbon fuels from California, the Pacific Northwest states of the U.S., Canada, Europe, and by imminent demands from forthcoming biojet regulations in the 2020s currently underway.

Low-carbon diesel demand in California has grown from zero in 2011 to over 500 million gallons per year (MGY) in 2018, achieving a 15% blend of the state’s 4 billion gallon diesel fuel pool, according to LCFS data calculations. One demand scenario from California’s ARB finds renewable diesel consumption to grow to 1.35 billion GPY in 2030, or 36 percent of the diesel pool. A more recent proclamation in 2019 by incoming California Governor Gavin Newsom sets an ambitious target for 100% decarbonization of California’s diesel pool, currently estimated at 4 billion GPY, by the year 2030.

To handle these large-scale 2030 LCFS transitions, low-carbon diesel producers in California, Oregon, Washington, Canada and Europe are building larger biorefineries. The Renewable Diesel 2030 study notes the average size of a current renewable diesel biorefinery in 2019 is currently 116 million gallons/year. New plants under construction are being built at more than twice the current size, at 263 million gallons/year on average by 2023. More than a handful of plants, if built, will surpass 500 million gallons per year in production capacity. The largest renewable diesel biorefineries planned to be deployed by 2023 include: REG/Phillips 66 in Washington State, NEXT Renewable Fuels in Oregon, and by Philips 66/Ryze Renewables with two 462 million gallon/yr plants each in Reno and Las Vegas, Nevada.

Some of these plants, such as the BS Bios Green Omega project to produce green diesel and jet fuel in Paraguay, are reaching sizes well over 600 million gallons/year. Most of these new renewable diesel biorefineries are being constructed to initially supply the states in the U.S. Pacific northwest and Canada and their new LCFS (Low Carbon Fuel Standard) plans. California, Oregon and Washington state together represent more than 5 billion gallons of renewable diesel demand by 2030.

In addition, this demand is prompting veteran renewable diesel producers Neste in Singapore (675 MGY), and Diamond Green Diesel in Louisiana (675 MGY) each to re-invest approximately $1 billion U.S. in their respective refineries to scale up their capacities and serve these key emerging markets for renewable diesel fuels and sustainable jet fuel demands.

As these low-carbon markets for road transport, aviation, and marine diesel progress, Renewable Diesel 2030: Low Carbon Fuels for Air, Land and Sea finds a growing number of strategic investment partnerships arriving to build new biorefineries, and greater interest in upgrading refineries to co-process low-carbon biocrude-oils and syncrude oils in Northern Europe, Canada, Oregon, Singapore, Australia, South America, and California.

Will Thurmond is the President and CEO of market research firm Emerging Markets Online, the author of Renewable Diesel 2030: Low Carbon Fuels for Air, Land and Sea; is a contributing thought leader to the Biofuels Digest; and is a regular speaker and session moderator at industry conferences. For more information, contact Emerging Markets Online in Houston, TX [email protected], or visit www.emerging-markets.com