Is there a future for biodiesel in a world that seems to be quickly scaling up HVO (renewable diesel)? Is this an industry that is going to be quickly supplanted in this decade? Will we see a massive consolidation and/or collapse of biodiesel producers and production globally? How will policy impact the industry?
These and other questions were discussed during The Future of Biodiesel web conference earlier this week with Scott Fenwick, Technical Director, Clean Fuels Alliance America (formerly the National Biodiesel Board); Johannes Schurmann, Innovation Manager, GoodFuels and Bruce Comer, Managing Director, Ocean Park. This post provides select highlights from the presentations and Q&A. The presentations and recording follow at the bottom of this post.
“For those of you that follow renewable fuels and the RFS, you know that the 2022 numbers were just recently completed and posted by the EPA. And so we are seeing what we think is a fairly significant increase in biomass-based diesel and the advanced category in which we play in both of those buckets. We think that that’ll continue. Again, we’re seeing a lot more support for biodiesel and renewable diesel than we did a few years ago.
Obviously talk is still about electrification. And certainly I think that’s the desire of this current Administration would be electrify all they can and then use liquid fuels, preferably renewable liquid fuels for everything else.The Department of Energy has stated that would include the rail, marine and aviation industries. Some have argued that the RFS ends at 2022 this is the last year of published volumes under most of those categories. It doesn’t. The RFS now transitions into a program that EPA is calling Set.
And so what has happened under the RFS for all the other fuels now moving forward is kind of the position we’ve been in since the very beginning. Biodiesel, the biomass-based diesel category, only had set volumes for the first three or four years. We started it at a few million gallons and worked up to 1 billion. And then after that, we have to justify to the EPA the volumes that they set each and every year that’s going to have to happen for all renewable fuels. Now, whether that’s cellulosic the advanced category, conventional, they’re going to have to have meetings each and every year and justify any volume increases based upon industry output.”
“How we’ve set up our renewable fuel policies in the U.S. is terribly dysfunctional when related to long term capital formation and long term investments and that’s why we probably haven’t had major investments in biodiesel production. We’ve had some investment in some crush facilities by the major soy crushers. I think that’s where you’ve seen some of the wherewithal on the RD investment is that these compliance requirements are not going away. They might go up, the nature of them might change a little bit, but overall they’re here to stay. And that, I think that’s led to that longer-term investment.”
“You have to be aware indeed that some companies might use biodiesel for green washing. What we see happening right now of course is that happening in the Netherlands. There’s quite some traction for the use of biofuels in shipping, but if you look at the total volumes, the share is still quite small. So it is of course, very, very good that companies are taking the first step showing that there are technical possibilities with those biofuels in shipping that regulations are adopted. To really scale, we need regulations. We need regulatory bodies to force the industry to scale up with their volumes. If just one company decides to take bigger shares of biofuels, they will just lose their position in the market because they will be more expensive.”
“We evaluate that political landscape and the market landscape. We’ve been told on numerous occasions by our friends and our foes, both, that we tend to punch above our weight class. I strongly believe that we will get something done. I can’t guarantee it’ll be by the midnight hour on December 31st, but I do believe that there will come some compromise and there will be a path forward, particularly now that we we’ve got some new friends new member organizations that seem to be willing to help push sustainability and low carbon fuels.”
“The perspective that Scott mentions is that we’ve got global shortages due to geopolitics. But biofuels is not here for the rescue. If we look at the fat, oils and greases — nobody’s going to order more French fries to get used cooking oil in time for this winter. There’s not going to be more soybean planted between now and the winter, and there’s not going to be more crush facilities to get soybean oil. And there’s probably nothing you can do to increase the amount of tallow. So I think we’ve got these biofuels, renewable diesel and biodiesel, that rely on these fats, oils and greases have really priced in inelastic limited supply of feedstocks.”
“I just wanted to share a short perspective in the shipping sector. Of course, ships transport goods very efficiently. So the amount of fuel needed for a ton of product is super low. If you look at the cost of biofuels, which is currently ballpark two, three times higher than at the fossil fuels, that would only mean that the price of one pair of sneakers to use biofuels instead of fossil fuels will only be 5 cents more. It is a somewhat higher price for biofuels. But is that really a problem? Know if you look at just one pair of sneakers, of course, for the shipping companies itself, it’s a big change, but if the end customer is willing to pay for that it should not be a problem. And then in terms of price increases with limited amount of feedstocks, of course that’s gonna be a problem, but that’s also the reason why we look for lipid biofuels feedstocks.”