Oil Refineries See Profit in Turning Kitchen Grease into Diesel

December 04, 2020

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by Clifford Krauss (New York Times) Used cooking oil is one of the ingredients in renewable diesel, which generates far less emissions than conventional diesel and allows refineries to take advantage of federal and state incentives. -- ... Companies that refine crude oil into fuel are increasingly using such putrid scraps to make a renewable version of diesel that can significantly reduce greenhouse gas emissions from trucks, buses and industrial equipment without requiring families and businesses to invest in expensive new vehicles and factory gear. Phillips 66, Marathon, HollyFrontier and several other refiners are spending roughly $2 billion to retool refineries to produce the fuel over the next four years.

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Production of renewable diesel is up roughly 7 percent this year. If current trends continue, refineries could produce as much as 3.8 billion gallons of renewable diesel by 2025, or more than 5 percent of the total diesel production last year, according to S&P Global Platts, an energy research firm.

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Some oil refining companies believe renewable diesel could help them stay profitable as governments move to significantly reduce the use of fossil fuels to address climate change — a process that is already well underway in Europe and could accelerate in the United States during the Biden administration.

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And oil refineries can make renewable diesel with a few upgrades.

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The incentives have a certain bipartisan appeal: Democrats see renewable diesel as a way to reduce emissions, and Republicans like it because it helps oil refineries and farmers and other agricultural interests.

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Valero, the country’s largest independent refiner, reported that its operating income from renewable diesel had tripled over the past year, to $184 million in the third quarter. That is a big gain given that the company reported an overall loss of $464 million for the quarter.

Valero has committed 40 percent of its spending on growth projects over this year and next to renewable diesel, which it makes through a joint venture in Louisiana called Diamond Green Diesel. It expects to increase production of the fuel to 675 million gallons a year by 2022, up from 275 million now. The company is also considering adding a plant in Texas.

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“Take one of those subsidies away and you are at break-even,” Mr. Lamp (CVR Energy chief executive, David Lamp) said.

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(S)aid Mr. Barrow of IHS Markit, “Renewable diesel is a way the refining industry can get a good return with a fairly modest investment, and it’s a way for them to participate in decarbonization.” READ MORE

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LCFS (Low Carbon Fuel Standard) Renewable Fuel Standard (RFS and RFS2) Regulations-Federal Regulations-State California Oregon British Columbia Canada Colorado Iowa New York South Dakota Agricultural Policy economic policy energy policy environmental policy Transportation Fuels Policy oil refineries repurpose Renewable Diesel/Green Diesel/HVO/Paraffinic Diesel used cooking oil (UCO) animal fat BioRefineries/Renewable Fuel Production trucks buses equipment Big Oil/Oil Majors Investing carbon credit RINs (Renewable Identification Numbers) RINs price Renewable Diesel Production climate change mitigation Louisiana Texas White House markets/sales market forces Sustainability

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