Kevin Milburn Presents at the 2022 AFPM Annual Meeting "Renewable Diesel - Unlocking the Complexities and Considerations" Session.

Renewable Diesel – Unlocking the Complexities

The North American refining industry is facing increasing pressure to reduce carbon emissions. This is especially true in regions that have active programs such as California (Low Carbon Fuel Standard or LCFS), Oregon (Clean Fuels Program), British Columbia (LCFS), and emerging Clean Fuel Standards in Washington, and nationally in Canada. These mandates are propelling the refining industry in those states to deliver progressively lower carbon intensity (CI) fuel. Further, the economic incentives to produce renewable fuels have been strong, such that, even though the logistical costs to access the LCFS regions are high, refiners in other states are also developing projects.

Most of the CI reduction regulations, or LCFS-type programs, target on-road transportation fuels, which have led to higher demand for low CI fuels. The blending of renewable diesel has become one of the most effective ways to deliver low CI fuels. This has led to interest in increased production capacity to meet the growing demand. In addition to renewable diesel, recently-proposed legislation and increased interest from airlines directed at renewable aviation fuels has led to considerable interest in a sister of renewable diesel, Sustainable Aviation Fuel (SAF).

The presentation provides: (1) an overview of the renewables programs that have been promulgated in North America; (2) a projection of renewable diesel supply and demand, and (3) some sample economic case studies that highlight the key drivers and risks, including feedstock sourcing, RIN prices, LCFS credits, and biofuels blenders tax credit.