Preparing for the Renewable Fuels Marathon: A Targeted Approach

A four-pillar concept from Chevron REG’s Rajani Modiyani is an intelligent way to establish a framework for adopting low-carbon fuels.

The renewable fuels industry stands at a pivotal juncture, where challenges and opportunities abound for stakeholders across the supply chain—from biodiesel and renewable diesel producers to petroleum terminals, wholesalers and fuel jobbers. Introducing new products and services, particularly low-carbon liquid fuels, is burdened with uncertainty. Yet, for nearly three decades, the biodiesel industry has demonstrated remarkable resilience, overcoming countless obstacles to succeed and advance.

The introduction of renewable diesel marks a significant milestone, with the petroleum industry embracing cleaner fuels that align with growing environmental sensitivities. This shift represents a renaissance in the energy sector, one that resembles a marathon rather than a sprint. Leading this transformation requires visionary leaders who think forward and embrace disruption constructively.

The energy sector must continuously innovate to meet the world’s insatiable energy demands. The development of biodiesel, renewable diesel and sustainable aviation fuel are commendable strides toward a cleaner-energy future. This transition, however, does not mean abandoning petroleum altogether. The world’s energy appetite necessitates an all-of-the-above approach. Both renewable diesel and biodiesel have roles to play, and the industry must ensure that the former’s transitional ease does not sideline the latter. With a production capacity of 2 billion gallons per year, domestic biodiesel production remains a crucial component of our energy landscape.

In a recent collaborative discussion with Rajani Modiyani of Chevron Renewable Energy Group, she shared with me an intelligent way to establish a framework for companies seeking adoption of low-carbon fuels. She calls this the four-pillar concept.

Technology scalability is essential for the low-carbon liquid fuels industry, encompassing the ability to expand and adapt on a large scale without significant losses in performance or economic feasibility. For biodiesel and renewable diesel, this means ensuring efficient production and widespread distribution. The goal is to maintain or improve efficiency as the industry scales up.

Infrastructure readiness is crucial for a seamless transition. Evaluating whether existing physical systems can reliably accommodate (store, blend and distribute) new fuels is essential, as is considering new infrastructure investments. This readiness includes ensuring facilities for heating biodiesel, transloading for rail deployment, and necessary amendments from production to consumption.

Operational integration focuses on how well low-carbon liquid fuels can assimilate into the existing supply chain. This involves the adaptability of current operations within the petroleum supply chain and the ability of downstream users to manage the transition effectively. Key aspects include personnel training, equipment modifications and overall operational efficiency. The industry’s ability to support this transition and its preparedness to adopt these changes are critical.

Economic justification is paramount as users evaluate the shift to clean energy and how it can be monetized effectively. This includes cost-benefit analyses comparing new technologies to fossil fuels, electrification and other options. It’s important to consider direct costs and externalities like environmental and health impacts associated with scope 1, 2 and 3 emissions. Ensuring biofuels are environmentally and economically viable without substantial subsidies is a significant challenge.

Balancing the Pillars

Each of these pillars addresses a fundamental aspect of transitioning to a low-carbon future. The relevance and importance of maintaining biodiesel plants as ready, willing and capable contributors to U.S. energy independence cannot be overstated. These valuable assets play a key role in the broader energy platform. We frequently hear about new renewable diesel capacity being considered or acted upon. Due to economic challenges, however, it’s not uncommon for biobased diesel producers to take their assets offline at their discretion. Our success will be compromised if we fail to maximize the existing production assets of both sectors.

When a company takes barrels offline, it can negatively impact supply into markets that took years—sometimes decades—to build. This also affects markets under review for expansion like marine, rail, aviation and mining. Who will supply all these sectors? It’s not a matter of either renewable diesel or biodiesel but rather leveraging all available resources. Our existing infrastructure has immense value, and we must ensure that it’s ready to service the burgeoning demand.

Scalability and reliability are critical. We need to focus on developing and advancing as many clean technologies as possible, working together to meet the demand that will likely continue to grow. This approach will ensure we can optimize the system without dismantling the infrastructure and the products it delivers without calculating the gains.

In this marathon of industry transformation, the key to success lies in collaboration and continuous advancement. By working together, stakeholders can develop and advance clean technologies to meet the ever-growing energy demand. The goal is to optimize the system, leveraging the strengths of both renewable and traditional energy sources to create a sustainable and robust energy future.

As we look ahead, it’s essential to keep an open mind and embrace innovation. The biofuels industry has demonstrated its resilience and capacity for growth. Now, it’s time to harness that spirit to navigate challenges and seize the opportunities ahead.