Looking at the changing landscape of biofuels, it’s clear renewable diesel is one to watch. It’s an environmentally friendly drop-in fuel with a lot of potential.
“It’s definitely a growth market and potentially a high growth market,” said Brooke Coleman, Executive Director of the Advanced Biofuels Business Council. “It could be an exponential growth market.”
Fueled by state and federal policies providing subsidies and tax incentives, POET expects renewable diesel production to grow by 300 percent in the next three to four years. For example, there’s the $1 per gallon federal blender’s tax credit, which is set to expire in 2022. California’s Low Carbon Fuel Standard (LCFS), is also particularly strong driver. “From a demand perspective, California is really moving the needle,” said Tim Norling, Portfolio Strategy Manager for POET.
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In addition, distillers corn oil has a favorably low carbon intensity (CI) score under the LCFS. Based on an average score of renewable diesel producers currently in production, distillers corn oil has a carbon intensity score of 30.87, Norling said. In comparison, soybean oil has an average CI score of 55.215. “The idea is, the lower the carbon intensity, the more beneficial and more profitable it is to some of these markets like California, Oregon and some Canadian markets that also look for a low carbon fuel,” he said.
Now, POET has a distiller’s corn oil feedstock targeted specifically for renewable diesel production called Voilà Premier. The co-product goes through the company’s patented and proprietary clarification process, allowing the customer to bypass that step at the production facility, said Dave Bushong, POET’s Senior Vice President of Research.
“We think this product is going to be the preferred feedstock when looking at other potential alternatives like soybean oil or animal fats,” Norling said.
Voilà Premier is currently in production at one of POET’s 27 bioprocessing facilities. The company is in the process of starting up production at a second location with plans to continue expansion, as called for by demand. Any crude corn oil can be used as a feedstock for renewable diesel production. However, metals must be removed before the production process, typically at the renewable diesel production facility. If not, it could damage the plant’s catalyst, causing a catastrophic failure that could cost weeks of downtime and millions of dollars, he said.
POET’s Voilà Premier, on the other hand, is a purer product that has gone through a process to remove magnesium, potassium, iron and other naturally occurring metals that are in the kernel as a part of the growing process. “It is a very unique process,” Bushong said, adding that the POET process is advantaged due to reduced process yield losses and transportation inefficiencies for the renewable diesel producer.
More About the Market
As a fuel molecule, renewable diesel is indistinguishable from diesel and can be produced with the same equipment used to produce diesel at a petroleum refinery. “They crack apart the molecule of vegetable oil, in our case, Voilà Premier, and reassemble it to be identical to a molecule of diesel fuel derived from a barrel of oil,” Bushong said. “So it looks the same, functions the same and performs the same.”
Of course, a big difference between the two fuels is that renewable diesel is produced from renewable feedstocks, making it much more environmentally friendly than diesel. “It’s an 85 percent reduction in greenhouse gases,” Norling said. “That’s a pretty big piece to this.”
One recent example of an oil refinery shifting to renewable diesel production is CVR Energy Inc. The company announced in a Dec. 21 press release that its Wynnewood, Oklahoma refinery’s hydrocracker unit will be converted to produce nearly 100 million gallons of renewable diesel per year. Costs are estimated at $110 million, which CVR Energy said it expects to recoup through the generation of renewable identification numbers (RINs) as well as the blender’s tax credit and LCFS credits.
Commercialization Process
From the time the company identified the potential new co-product stream it took a year to reach commercial production at a POET biorefinery, Norling said. It has now been a little over a year from when the first gallons of Voilà Premier were sold into the marketplace in December 2019.
“Our team of scientists started working to figure out what they could do and our team of sales people started figuring out what the market wanted,” Bushong said. “We began to walk those two paths parallel to each other until they converged at our Voilà Premier product.”
One of the first steps was to develop a process to detect metals in distillers corn oil. The company’s in-house science team worked on that with the help of third parties, such as university researchers and others. “We really worked hard to understand how to measure and characterize the metals and then how to resolve the problem,” Bushong said.
The next step was to perfect the process to remove the metals. In the end, POET created a scientifically validated process that has been thoroughly tested. “We spent a lot of time and resources testing to prove without a reasonable doubt that our product is as good as we say it is and it’s repeatable, as we say it is,” Bushong said. In fact, Bushong considers the process “pretty darn bulletproof.” In addition, Voilà Premier is a product the company is confident the consumer wants. “We have extremely low metals in our material and a high degree of clarity,” he said, “and we know we can do it all the time, every time, with the technology that we developed.”
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Bio Vs. Renewable
POET believes renewable diesel has a lot of potential. Biodiesel does have positives, such as its lubricity factors. But renewable diesel can be dropped into the fuel supply without limitations.
Norling agrees. “We’re going to see a pretty large shift from biodiesel to renewable diesel over the next couple years,” he said.
One selling point of renewable diesel is that it can be transported, stored and sold in the same infrastructure as diesel and at a 100 percent inclusion rate. “You can just drop it in and go and you don’t see any fuel mileage reduction,” Bushong said.
Biodiesel, a methyl ester fuel, is typically sold in blends no higher than B20. “It gets stored in its own tank and gets shipped in its own rail cars and it can’t go through a pipeline,” Bushong said, “so it has all these logistic infrastructure hurdles in its way.”
Biodiesel’s cloud point, or the temperature it gels up in a fuel tank in cold weather, is another consideration. “Diesel fuel and renewable diesel has that issue too but it’s a much lower temperature than biodiesel because, again, they are reforming the molecule to match indistinguishably different from a diesel molecule,” he said.
Policy Potential
The growth of renewable diesel, as well as other biofuels, depends on how quickly and aggressively carbon regulations–including the RFS–are implemented, after only being implemented well intermittently since 2007, Coleman said. The unknown at this point is what actions President Joe Biden and his administration will take on this front.
“I think there’s a temptation to look for a new shiny object, new policy,” he said. “But the reality on the ground is, we have a greater chance of reinvestment in existing law, and that’s the RFS, than we do at creating a new law, even with the current makeup of Congress.”
If the RFS were embraced for what it is, a fuel diversification and greenhouse gas reduction regulation, transformative outcomes could happen in the transportation sector very quickly. “Then you have a situation where renewable diesel, particularly from sustainable feedstocks like corn oil, has tremendous potential to grow,” he said.
Coleman stressed that the best solution would be to stop providing policy incentives for the use and extraction of oil and move toward more consistent and reliable incentives for clean and renewable fuels. That would help address the problem of climate change and oil dependence. “I would certainly like to see, when someone pulls up to the pump, 100 percent of that fuel dollar stay in the United States,” he said. “And renewable fuels are one of the best ways to do that.”
