Specialist
Executive at Environmental Fuel Research LLC
Agenda
- Renewable fuels market overview and opportunities in renewable diesel and SAF (sustainable aviation fuel)
- Pace of capacity growth and crude oil refinery conversions relative to renewable diesel market size
- Feedstock analysis – soybean oils vs used cooking oils and fats, margin outlook and possible food price inflation
- Regulatory environment and impact of credits on renewable fuels profitability
Questions
1.
How does the current pace of investment and interest in renewable fuels compare to other periods in your career? Do you think it’s more or less promising or about the same?
2.
What opportunities are companies in the renewable fuels market trying to capture? Where are the biggest opportunities? You mentioned the California LCFS [Low-carbon Fuel Standard] programme – is that the biggest or only opportunity?
3.
What kind of investment is required to build a renewable diesel facility?
4.
Is a 100-million-gallon-per-annum facility – costing about USD 500m to build – a typical facility size, or do sizes range? Are there limits or benefits to scale?
5.
How large is the renewable diesel market? Presumably it’s in the billions of gallons if all these facilities are being built.
6.
You mentioned that SAF [sustainable aviation fuel] is similar but not identical to renewable diesel. Is renewable diesel a perfect substitute for traditional diesel from crude oil? Have there been any issues with it?
7.
What modifications need to be made to a renewable diesel plant to make SAF and how much do those modifications cost?
8.
You estimated we’ll be at 1.3 billion gallons per annum in renewable diesel capacity at the end of 2021, increasing to 4.2-4.5 billion gallons per annum in a few years. Will that be from traditional refiners or PE firms? You mentioned airlines as a potential source of capital. Which companies are adding this capacity, beyond Diamond Green Diesel?
9.
Do the growth risks originate from overbuilding, or perhaps sourcing equipment and people for building?
10.
You noted palm oil will start getting imported into the US as a feedstock. Is this use currently at zero and where is palm oil being used globally? How will this palm oil end up in the US as a feedstock?
11.
Could you compare soybean oil prices to used cooking oil and fats? You mentioned soybean oil prices might become cheaper than that of used cooking oil and fats. When might those prices cross?
12.
If feedstock prices were identical, would a renewable diesel plant experience any difference in yields? Would the profitability be the same when including credits?
13.
Are there better places in the US to source soybean oil or used cooking oil for manufacturing renewable diesel, or doesn’t it matter as long as the product can be sold into California, for example?
14.
Why do you think the Biden administration has been slow in addressing the issues of credit, the Renewable Fuel Standard and the Federal Blenders Tax Credit?
15.
Have profit margins been squeezed, or are they still expanding? You mentioned feedstock costs were about USD 0.29 per pound a year ago and they’ve effectively doubled. The carbon price in California has decreased from last year’s average, but fuel and diesel prices are a lot higher. Might renewable fuels be a more or less profitable business next year?
16.
Are there any inflation risks to construction costs for renewable diesel facilities? Might agriculture or food price inflation risk the support that the renewable energy industry receives from governments, as its feedstocks are used for food?
17.
What parts of the value chain are the most important for projects or companies entering the renewable fuels industry? Which kind of companies are more likely to be successful if they address certain issues?
