What’s That: Renewable Diesel

In our ever-evolving quest for sustainability and reducing the environmental footprint of our energy consumption, renewable diesel emerges as a driver for the alternative fuels market. Unlike its cousin, biodiesel, renewable diesel offers a cleaner, more efficient, and technically advanced solution to green transportation needs. Let’s dive into what renewable diesel is, how it stands apart from biodiesel, and its availability and price differentials in the U.S. market.

What is Renewable Diesel?

Renewable diesel, also known as green diesel, hydrotreated vegetable oil (HVO), or second-generation biofuel, is produced from the same biomass feedstocks as biodiesel, including vegetable oils, animal fats, and waste cooking oil. However, the similarity nearly ends there. The production process for renewable diesel involves hydrotreating these feedstocks, a process that removes oxygen and uses hydrogen to break down the molecules into shorter hydrocarbon chains. This process closely resembles the traditional petroleum refining technique, resulting in a fuel that’s chemically similar to petroleum diesel.

Renewable Diesel vs. Biodiesel

The primary differences between renewable diesel and biodiesel lie in their production processes and the resulting fuel characteristics:

Production Process: Renewable diesel is produced through hydrotreatment, which significantly alters the chemical structure of the feedstock, creating a pure hydrocarbon diesel. Biodiesel, on the other hand, is made through esterification, a simpler chemical reaction that leaves oxygen in the fuel.

Quality and Performance: Due to its production process, renewable diesel is of higher quality, with a higher cetane number (indicating better combustion quality) than biodiesel. It’s virtually indistinguishable from petroleum diesel, allowing it to be used in existing diesel engines without modification. Biodiesel can also be used in diesel engines but often requires blending with petroleum diesel to meet engine manufacturers’ specifications and avoid cold weather performance issues.

Storage and Handling: Renewable diesel’s chemical similarity to petroleum diesel means it doesn’t require special handling or infrastructure changes. It has a longer shelf life and better cold weather performance than biodiesel. Biodiesel can gel at lower temperatures, requiring additives or blending to improve cold weather performance.

Environmental Impact: Both fuels significantly reduce carbon emissions compared to petroleum diesel. However, renewable diesel’s production process and resultant fuel purity often lead to slightly lower greenhouse gas emissions throughout its lifecycle than biodiesel.

Availability and Price in the U.S.

Renewable diesel’s popularity in the U.S. has grown over the past few years, driven by federal and state incentives aimed at reducing carbon emissions and promoting cleaner fuel alternatives. Major renewable diesel plants are operating in states like Louisiana, California, and Texas, with more in development.

As per the U.S. Renewable Diesel Fuel and Other Biofuels Plant Production Capacity report, dated January 1, 2023, the United States boasted 17 renewable diesel production facilities across 12 states, collectively capable of producing approximately 3 billion gallons annually. Among these, two facilities were repurposed petroleum refineries now dedicated to biofuel production. In 2022, the production of renewable diesel in the U.S. reached about 1.5 billion gallons, with consumption slightly higher at around 1.7 billion gallons, incorporating roughly 0.3 billion gallons of imports. California is the primary consumer of imported renewable diesel fuel in the U.S.

The price of renewable diesel tends to be higher than both biodiesel and traditional diesel, primarily due to the more complex production process and the current demand exceeding supply. The exact price differential varies by region and over time, influenced by feedstock availability, production costs, and government incentives. In markets like California, where renewable diesel is more readily available and supported by state policies, the price is competitive with, and can sometimes be lower than, petroleum diesel when factoring in state and federal incentives.