Renewable Diesel Starved for Feedstocks

by Todd Neeley (DTN Progressive Farmer) CHS Executive Halvorson Says Math Doesn't Add Up for Renewable Diesel Growth -- As exciting as the explosion of the renewable diesel industry is for agriculture, an executive with CHS Inc. said during the DTN Ag Summit on Monday that the math doesn't add up for supplying enough feedstocks to fuel the growth.

Gary Halvorson, CHS Inc. senior vice president of enterprise customer development, said change is inevitable in agriculture, and renewable diesel in particular and renewable energy, in general, are going to continue to influence cropping decisions.

"Obviously, tomorrow is not the same as today or yesterday, and we're all going to have to do more to invite ourselves to change," he said.

"Outsides markets will continue to have an outsized influence in agriculture. It's more about what's going on around the world than it is here at home."

Halvorson said the expansion of soybean crush capacity and the growth of renewable diesel will play a role in perhaps changing farmers' cropping decisions.

If the renewable diesel expansion is to be fully realized, he said, more farmers will need to move corn acres to soybeans.

New construction announcements about soybean crush facilities and renewable diesel plants have been popping up for the past two years, increasing demand for soybean oil and charting a path for change in crop acres in the decades to come.

Halvorson said that because it takes a while to build a new crushing plant, the change in crop demand will be gradual.

Halvorson compared the current trek into renewable diesel to the corn ethanol expansion near the turn of the century.

"Maybe 15 years ago we saw increased ethanol mandates, and that was certainly bolstering for the corn markets. And now we're seeing the same impact or similar to what's going on with soybeans."

Halvorson said CHS is watching closely how rural America moves into electric vehicle technology and what it might mean for renewable fuels such as ethanol and biodiesel.

There's a large demand for diesel fuels in agriculture, including tractors, trailers, sprayers and other implements, which Halvorson said leaves his company with a "glut" of gasoline.

"And so, for CHS, finding a way to get rid of gasoline is of utmost importance," he said.

"And now we've got this new passion, this new kind of awareness for technology and electric charging. These are disruptive to the gasoline industry. So, we see a really big future for diesel fuel that lasts for a very long time that's today not being disrupted by this technology. But gasoline will get to be the burden of the energy complex in the U.S." READ MORE

Excerpt from AgWeb: It's one of the fastest growing industries in ag, soybean processing, with several companies announcing plans to build facilities in the coming years. The latest ones we told you about earlier this month. Bunge has plans for a $550 million dollar plant in Morristown, Indiana, and Epitome Energy is also building a $400-million facility in Grand Forks, North Dakota.

Plans are in the works for 18 new soybean processing plants and there are more on the drawing board. With the push for low carb fuels like renewable diesel and Sustainable Aviation Fuel the industry has exploded and it’s a long term positive for farmers.

The soybean processing industry is entering a new era, driven by the demand for low carbon fuels like Renewable diesel which can be made from feedstocks like soybean or other veg oils. John Jansen, vice president of strategic partnerships for the United Soybean Board says, "It sequesters and eliminates a significant amount of greenhouse gas and carbon as compared to fossil fuels.”

It’s being used to meet California’s low carbon fuel standard, but the interest doesn’t stop there. Grant Kimberley, senior director of market development at the Iowa Soybean Association says, "Well, right now the renewable diesel capacity is about 1.5 to 1.6 billion gallons a year. And we anticipate that to go up by another approximately 500 million gallons over the next year. There are other announcements to further out where we could see an increase of a couple billion gallons more and ultimately, we think potentially we could get to 6 billion gallons by 2030."

Kimberley says that’s if you also factor in biodiesel and sustainable aviation fuel. He says, "There's over a 25-billion-gallon potential market here in the US alone. almost 100-billion-gallon market globally. And a lot of the major airlines around the world are making commitments to us a certain percentage of their fuels come from sustainable aviation fuel." Tom Kersting CEO of South Dakota Soybean Processors agrees that the market potential is huge. "Just think about demand, just from aviation alone, it will take every drop of soybean oil that's produced today. It's that big." READ MORE