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Market overview

Emission control regulations by the government, growing want for clean and renewable fuel sources, and increasing demand for renewable fuels in road transportation are the factors driving the biofuel market.

Renewable diesel fuel is made mainly from agricultural waste products and vegetable oils, greases, or animal fats. It has the benefit of not requiring the use of fossil fuels. Producers establish a circular system by using agricultural byproducts, in which waste from one activity is put to profitable use in another. The manufacturing processes utilize existing resources as feedstock that would otherwise be discarded, resulting in a circular resource loop.

Renewable diesel, also known as green diesel or hydrotreated vegetable oil (HVO), is created by hydrotreating triglycerides (fats) to remove metals, nitrogen, and oxygen-containing components. Impurities are removed from raw materials throughout the manufacturing process, and the materials are subsequently hydrotreated at a high temperature. The result is a colorless and odorless fuel of uniform quality with the same chemical makeup as fossil diesel. It is also known as a second-generation biofuel.

Because renewable diesel is chemically identical to petroleum diesel, it may be used either in its pure form (R100) or mixed/blended with petroleum diesel-like biodiesel mixing.

Because renewable diesel contains no oxygen, customers do not have to worry about storage or temperature difficulties. More importantly, because of hydrogenation, renewable diesel burns cleaner than biodiesel and fossil fuel-based diesel.

Advantages of renewable diesel:

• It can be used in 100% concentration
• It runs smoothly and effectively in all diesel-powered cars
• It does not require upgrades on existing refinery equipment to produce this fuel

Policies

• USA

1. The Renewable Fuel Standard policy of the federal government mandates increasing volumes of renewable fuel to be mixed into transportation fuel each year to reach the target of 36 billion gallons by the end of 2022. The RFS program stipulates that each renewable fuel category emits less greenhouse gas (GHG) than the petroleum fuel it replaces.
2. The LCFS is a crucial component of a comprehensive set of efforts in California to reduce GHG emissions and hazardous air pollutants through vehicle technology upgrades, reduced fuel use, and expanded transportation connectivity options. The LCFS is intended to lower the carbon intensity of California's transportation fuel pool and provide an increasing variety of low-carbon and renewable fuels, lowering petroleum dependency and improving air quality.

• EU - The European commission's renewable energy proposal for 2030 - The proposed new directive, called RED II, entered into effect on January 1, 2021. The plan recommends legislative steps to reach a renewable energy share of 27 percent of the energy used by the electricity, heating, cooling, and transportation sectors by 2030. RED II would require that 6.8% of transportation fuels, especially advanced alternative fuels and renewable power, be derived from renewable sources as part of the overall 2030 objective. Fuel companies may be able to meet this goal by combining renewable fuels, such as:
  • Non-food biofuels, both advanced and traditional, and biogas derived from low-carbon feedstocks
  • Non-biological renewable liquid and gaseous transportation fuels;
  • Waste-based fossil fuels; and
  • Renewable electricity.

Market developments and trends

• Based on various announcements for projects that are either presently under construction or might be in development shortly, the United States' production capacity for renewable diesel could expand dramatically through 2024. Higher state and federal renewable fuel objectives, favorable tax incentives, and the conversion of existing petroleum refineries into renewable diesel refineries are driving this increase.
• According to the E.I.A., renewable diesel production capacity in the United States was almost 0.6 billion gallons per year as of the end of 2020. Several projects presently under development may add 2.4 billion gal/y to this capacity; planned and announced projects would add another 1.8 billion gal/y by 2024. If all projects are completed as planned, renewable diesel output in the United States will reach 5.1 billion gal/y by the end of 2024.
• Renewable diesel capacity is rapidly expanding in the United States, led by global refiners upgrading existing fossil fuel refineries to process renewable feedstock. New renewable diesel investments are substantially greater in size than the biodiesel business, which agricultural players predominantly hold. These facilities are being created to satisfy the tighter compliance duties of fuel market participants under the California Low Carbon Gasoline Standard (LCFS), which intends to steadily lower the carbon footprint of fuel mixes marketed in California.
• Europe, among other significant markets, will see renewable diesel expand quicker than biodiesel under REDII, as well as prospects for renewable jet fuel.
• Brazil Biofuels (B.B.F.) and Vibra Energia, the country's primary fuel distributor, have agreed to begin building the country's first hydrotreated vegetable oil (H.V.O.) facility.
• Wood is working on a project for Renewable Energy Group (R.E.G.) to extend R.E.G.'s renewable diesel fuel portfolio to fulfill the world's rising demand for renewable fuels. The contract will support R.E.G.'s renewable diesel biorefinery upgrade and expansion project in Geismar, Louisiana.
• While alternative propulsion locomotive technologies are being explored, trials and certifications of up to 100 percent bio-based diesel fuel are key milestones in lowering greenhouse gas (GHG) emissions from C.N.'s existing locomotive fleet. Canadian National Railway Company and Progress Rail, A Caterpillar Company, are cooperating with Renewable Energy Group to test high-level renewable fuel mixtures that include biodiesel and renewable diesel to support the businesses' sustainability goals. This research will help C.N. and Progress Rail better understand the long-term durability and operational consequences of renewable fuels on locomotives, particularly in cold weather. It will allow them to plan the required improvements to utilize their usage over the next decade fully.
• Marathon Petroleum Corporation is turning its Martinez, California, refinery into a renewable fuels production facility, with the goal of producing 730 million gallons of reduced carbon-intensity renewable fuels per year.
• B.P. announced a $269 million investment in three projects at its Cherry Point Refinery in Washington state to enhance the refinery's efficiency, lower CO2 emissions, and expand its renewable diesel production potential.
• Shell announced that it plans to create sustainable aviation fuel of around 2 million tonnes per year by 2025. It also intends to use S.A.F. in at least 10% of its worldwide aviation fuel sales by 2030. This comes after the oil and gas corporation announced plans to develop an 820,000-tonne-per-year biofuels factory at the Shell Energy and Chemicals Park in Rotterdam.
• Maire Tecnimont, through its subsidiary NextChem, has signed an M.O.U and a Front-End contract with Essential Energy U.S.A. Corp. to build a new biorefinery in South America to produce Renewable Diesel.

Opportunities

• Manufacturers can capitalize on the opportunity to provide SAF (sustainable aviation fuel) to the U.S. and Europe. These two countries have set goals to produce almost 4 billion gallons of annual sustainable aviation fuel by 2030 and more than 45 billion by 2050.
• In the U.S., the Biden administration is accelerating its efforts to reduce the carbon footprint of the nation’s transportation system. As a result, soybean growers could soon cash in on a new opportunity around low carbon fuel standards for renewable diesel.
• Developed economies, notably North America and Western Europe, are turning to renewable diesel due to continuous legislative changes aimed at reducing GHG emissions, which require larger percentages of low carbon fuel content in the transportation sector.

Blackridge Research's Global Renewable Diesel Market report provides insights into the current global and regional market demand environment and prognosis.

The study offers a thorough examination of the many factors that impact the global renewable diesel market growth. The study also comprehensively analyses the global renewable diesel market by segmenting it based on geography (North America, Europe, Asia-Pacific, Middle-East and Africa, and South America.

The report also discusses current and future market possibilities, market trends, advancements, essential developments, regions, and segments poised for the fastest-growth, competitive landscape. Further, the global renewable diesel market size, and demand forecast, growth rates will also be provided in the report.