Guest “Do they intentionally get the headlines wrong?” by David Middleton
MARCH 24, 2022
EIA projects U.S. renewable diesel supply to surpass biodiesel in AEO2022
In our Annual Energy Outlook 2022 (AEO2022) Reference case, which reflects current laws and regulations, we project that renewable diesel supply (domestic production and net imports) will exceed biodiesel supply in the near term. We project that renewable diesel supply will increase to 130,000 barrels per day (b/d) in 2022 and 145,000 b/d in 2050, reflecting a significant increase in renewable diesel production capacity in the near term.
Biomass-based diesel fuels include biodiesel and renewable diesel, both of which are refined from the same types of fat, oil, and grease feedstocks. Renewable diesel is chemically indistinguishable from petroleum diesel (known as a drop-in diesel fuel), meaning that it meets specifications for use in existing infrastructure and diesel engines and is not subject to any blending limitations. Biodiesel is a mixture of chemical compounds known as alkyl esters and is often combined with petroleum diesel in blends of 5% to 20%, known as B5 to B20, respectively.
We project that production of renewable diesel supply will grow because of its compatibility with existing distribution infrastructure and engines, higher state and federal targets for renewable fuel production, incentives from tax credits, and the conversion of existing petroleum refineries into renewable diesel refineries.
Targets and incentives that contribute to renewable diesel’s growth include the Renewable Fuel Standard, California’s Low-Carbon Fuel Standard, and the U.S. biomass-based diesel blender credit, which currently applies through 2022 and allows qualified taxpayers to claim a credit of $1.00/gallon when the required amount of biodiesel or renewable diesel is blended with petroleum diesel for sale or use in a trade or business. In response to the improved economics of renewable diesel due to these policy actions, domestic production capacity has increased, both in the form of new stand-alone facilities and converted petroleum refineries.
We assume that policies, rather than market demand, drive the adoption of biomass-based diesel fuels in the AEO2022 Reference case. Renewable diesel and biodiesel compete for the same feedstocks, so some of the projected growth in renewable diesel production displaces biodiesel production. We project these two fuels will remain a relatively small part of the larger diesel market, accounting for less than 8% of the U.S. diesel production in 2050.
Principal contributors: Estella Shi, Will Sommer, Andrew SmiddyEIA
The EIA features this graph at the beginning of the article…
And then, near the bottom of the article, they tossed in this graph…
Shouldn’t the headline have been more like this?
EIA projects U.S. biomass-based diesel fuels to remain less than 8% of total diesel supply in AEO2022
Or maybe this should have been the headline:
Policies, rather than market demand, drive the adoption of biomass-based diesel fuels in the AEO2022 Reference case… Explaining lack of demand growth
This bit is fracking hilarious:
Renewable diesel is chemically indistinguishable from petroleum diesel…
Diesel from recently dead plants is good for the climate… Diesel from long-dead algae & plankton is bad for the climate… Yet the good diesel is “chemically indistinguishable from” the bad diesel.
Yes… As a petroleum geologist, I fully realize that petroleum diesel moves carbon from the geological (slow) carbon cycle back into the active (fast) carbon cycle. Whereas, renewable diesel “recycles” carbon that’s already in the active cycle. That said…
Renewable Diesel Evaluation in UPS Fleet Vehicles
Results indicate that, on average, renewable diesel reduces carbon dioxide emissions by 4.2% compared to petroleum diesel.
I don’t want to sound cynical… But a 4.2% reduction in carbon dioxide emissions seems like it would be in the margin of error. At the very least, it doesn’t sound significant.
Carbon dioxide emissions
The U.S. Energy Information Administration (EIA) estimates that in 2020, diesel (distillate) fuel consumption in the U.S. transportation sector resulted in the emission of about 432 million metric tons of carbon dioxide (CO2), a greenhouse gas. This amount was equal to about 26% of total U.S. transportation sector CO2 emissions and equal to about 9% of total U.S. energy-related CO2 emissions in 2020.
Last updated: December 2, 2021EIA
OK… Diesel fuel consumption accounts for “about 9% of total U.S. energy-related CO2 emissions”. If we replaced all of the petroleum diesel with renewable diesel, it would reduce CO2 emissions by about 4%… 96% of 9% is still 9% (8.64%). 96% of 432 million metric tons is 415 metric tons. The maximum effect that renewable diesel could possibly have is an insignificant effect.
“The Future’s So Bright, I Gotta Wear Shades”
Renewable diesel: Frontier fuel with a future?
NOVEMBER 12, 2020
Once upon a time in the West
Living on the West Coast of the United States and working in energy does not always go hand-in-hand. I’ve had enough 4 a.m. meetings with my colleagues in Houston to realize that. It can, however, provide you with a preview of the direction that the global energy industry and energy consumers are traveling.
How the West was won
So why is this taking off in California? The short answer is incentives. The long answer is three complementary sets of incentives. Renewable diesel is eligible for Federal Renewable Fuels Standards (RFS), Californian Low Carbon Fuel Standard (LCFS) and Blenders Tax Credit (BTC) subsidies. These subsidies alone currently cover the fuel production costs meaning that early movers in this space are seeing profit margins of up to 45 percent.1 Numbers the oil and gas market could only dream of in today’s market.
Funny, I don’t recall anyone whining about “windfall profits” of renewable diesel companies back in 2020, despite the fact that government subsidies covered their “fuel production costs”.
Well, that bright future sure didn’t last long.
US renewable diesel production faces headwinds from high feedstock costs
11 Aug 2021
Author Janet McGurty
Editor Jim Levesque
Commodity Agriculture, Electric Power, Oil
The growing popularity of repurposing or building renewable diesel facilities by US refiners and others seems to have hit a roadblock, as growing demand for feedstock is pressuring supply and price.
CVR Energy has decided, for the time being, to keep the hydrocracker at its Wynnewood, Oklahoma, refinery in “oil service” rather than take the unit down to complete the renewable diesel conversion process because of the high cost of renewable diesel feedstocks, CEO Dave Lamp said Aug. 3.
“Renewable diesel feedstock prices have increased considerably, particularly for refined, bleached and deodorized soybean oil, to a level where economics do not make sense for us to complete the conversion at this time,” he said.
[…]S&P Global, Commodity Insights
And those headwinds of 2021, keep getting stronger…
Why aren’t the Democrats clamoring for a soybean oil “windfall profits tax”? I guess they’re busy with even dumber ideas: Lawmakers propose $100 ‘energy rebate’ stimulus checks to offset high gas prices
EIA AEO2022 projects that, market demand, despite policies, will continue to drive this: Petroleum and natural gas are the most-used fuels in the United States through 2050…
As it turns out…