Renewable Diesel Gains Market Momentum

by Julian Buckley (Power Progress) Neste is currently the world’s largest producer of HVO (hydrotreated vegetable oil), or as it is known in North America, renewable diesel. The fuel is a drop-in replacement for fossil-derived diesel, so much so that a series of major engine OEMs have already approved HVO/renewable diesel for use in their diesel models. In addition to that flexibility, renewable diesel offers a series of benefits over its crude oil-derived cousin – but more on that later.

“We have an annual nameplate capacity of approximately 5.5 million tonnes,” says Carrie Song, senior vice president, Renewable Products, at Neste, who spoke with Power Progress International in an exclusive interview. “We’re investing about $1 billion to expand production capacity at our Rotterdam site and, together with other capacity investments in Singapore, we are projecting that we will reach annual production of 6.8 million tonnes (approx. 2.3 billion gallons) of renewable products by the end of 2026.”

The products delivered by Neste are all derived from what would otherwise be considered waste, including used cooking oil and animal fats.

Unlike the fractional distillation process used to produce fuel from crude oil, which produces a series of other byproducts in addition to petrol and diesel fuel, the process used by Neste generates very few byproducts – these are limited to renewable propane, naphtha and water.

The benefits, the improvement in air quality and reduction in particulates when using renewable diesel in an older engine, these are proportionally higher.”

“Because of the stability of the molecules that make up renewable diesel, the product has an amazing shelf life,” says Song. “Production started about a decade ago and we periodically take samples from those early batches to check the quality. Even now, the product meets all related specifications.”

She says that biodiesel might have a shelf life of a few months, while fossil diesel remains viable for about a year. As such, the characteristics of renewable diesel which allow it to remain a viable fuel for many years mean it’s ideal for use with gen sets put in place to deliver backup power.

In addition, because there are no aromatics in the renewable diesel, the fuel burn is far cleaner. Less carbon buildup within the engine can support extended service intervals and reduced servicing costs, both in terms of downtime and also the need to replace filters and other components.

Adoption barriers

Renewable diesel can use all the same infrastructure as fossil diesel – this extends from the national distribution pipelines which move fuel across large geographic regions, through to the marine tankers, trucks and storage tanks. Due to its chemical similarity, the renewable fuel can mix with fossil diesel in any percentage combination.

Yet despite ready accessibility in areas with the supporting distribution networks and infrastructure, renewable diesel remains more expensive than fossil fuel.

“Even with the available incentives, renewable diesel is expensive when compared to the fossil equivalent,” says Song. “I would argue that a large part of that difference is down to fossil fuel producers not incorporating the cost of the pollution generated from their product in the final retail price. We’re factoring that into the process and price, the fuel is produced sustainably and is fully traceable, so like-for-like it’s not necessarily a fair comparison.”

“We have a really good market share in Finland, selling to retail customers,” explains Song. “We also have a series of partners in The Netherlands which are offering Neste MY Renewable Diesel. That has been available since 2019.”

In the US, Neste has a series of partners which offer renewable diesel. While these are not open to retail customers - the fuel is purchased by truck drivers using dedicated cards - the program has expanded outside California to where there are now outlets throughout the Pacific Northwest.

“From a capital investment perspective, it doesn’t make sense for a company to scrap their fleet of internal combustion-powered machines and switch overnight to a new technology.

“We believe that renewable diesel offers a way to mitigate the emissions from those engines. Maybe some will be replaced over time by new technologies, but until then the fuel can help to reduce the collective environmental impact.”

Then there are the applications which have very high power requirements, such as mining and marine. Song says that the expectation is that a high percentage of these will have no choice but to stick with internal combustion. Again, in these cases, renewable diesel offers a route to off-setting emissions related to using fossil diesel.

According to Song, the setup cost of the joint-venture production site in California was around $1 billion. She says that more than 50% of diesel product in California is now made up of renewable fuels, but the Neste joint-venture with Marathon Petroleum is still reported to be operating at just 50% of capacity.

“I would like to see more states follow the lead set by California,” she says. “Possibly supported by government policy, replacing diesel with renewable product would eliminate a significant amount of carbon emissions.”

In April of this year, New Jersey Natural Gas (NJNG) made the switch to Neste MY Renewable Diesel. Across the company’s fleet of 70 medium-duty trucks, NJNG will use 57,000 gallons (168 tons) of fuel each year. Producing 75% less CO2 than standard diesel (calculated over the total lifecycle), this is an annual emissions reduction of 550 tons. The fuel is delivered by Neste distributor Diesel Direct, described as the country’s largest mobile on-site fuelling company.

Song: “We see some customers making the switch [to renewable diesel] voluntarily. But it is more difficult to promote that switch without policy support, from a cost perspective. If we want to scale up East coast expansion, it will require the government to speed up support for clean fuel products.” READ MORE