Renewable diesel could mean big things for soybean growers
April 8, 2022
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  • The nation’s push for renewable fuel continues, and that push has given birth to renewable diesel.

    “Renewable diesel is the shiny new object that everyone is after,” said Joe Kerns, founder of Partners for Production Agriculture in Ames, Iowa.

    The demand is driven largely by California’s Low Carbon Fuel Standard, which aims to reduce carbon emissions by 40% from the state’s 1990 level by 2030. Because of that low emissions goal and large number of vehicles in the state, California has a lot of incentives in place to bring in renewable fuels that make renewable diesel more affordable.

    The terms “renewable diesel”  and biodiesel sound similar. While both start with the same raw material base, they are not quite the same.

    Because of the incentives, Kerns says plants are adding 600 million bushels worth of additional crush capacity, a 30% increase over the 2.2 billion crush capacity already in place.

    That means soybean growers have new customers for soybeans and soybean oil.

    Diamond Green is the biggest producer of renewable diesel in the world with a 700 million gallon renewable diesel plant in New Orleans.

    The company is the country’s No. 1 buyer of corn oil, used cooking oil and animal fat. They’re the largest buyer of soybean oil, and their demand will increase when a 500 million-gallon renewable diesel plant comes online in Port Arthur, Texas.

    As gasoline demand dropped since 2020, several petroleum refineries are getting into the renewable diesel business. They need the cleanest high-quality feedstock available called refined bleach deodorized soybean oil, according to Tom Verry, director of outreach and development for Clean Fuels Alliance America (formerly the National Biodiesel Board). Big plants in California and the Mountain West are sourcing a lot of that soybean oil.

    Some of those companies can take renewable diesel one step further and turn it into sustainable aviation fuel, Verry said. World Energy in Los Angeles has a 40-million gallon renewable diesel plant, making 36 million gallons of renewable diesel and 4 million gallons of sustainable aviation fuel.

    Some people and stakeholders within the industry may see renewable diesel eventually replacing biodiesel. Matt Herman, director of environmental science with Clean Fuels Alliance America, said the two products are working hand-in-hand in California where blends of 80% renewable diesel and 20% biodiesel are being used. .

    “We don’t see it as a threat,” Herman said.

    Renewable diesel is a so-called “dry fuel” that needs a lubricator to make everything run smoothly in the engine. Biodiesel is a natural lubricity additive.

    “When you blend these two, you get beneficial properties for your engine,” Herman said.

    Biodiesel also has a little bit of oxygen in that fuel molecule, and when added to renewable diesel, the engine’s ignition process is more efficient.

    “Biodiesel and renewable diesel compete for the same feedstock,” Herman added. “What we really need to expand our available feedstock in the U.S.”

    Higher soybean demand means strong prices for soybean growers. What does that mean for livestock farmers that need to buy soybean co-products to feed their animals? Kerns says it will eventually be “the best thing ever.”

    “The price of soybean meal is going to become very cost-competitive as more and more soybeans get crushed,” Kerns said.

    Soybean oil will continue to be the driver and soybean meal will be the residual value, he said. The industry can store a year’s worth of soybeans, six weeks’ worth of soybean oil, and seven days’ worth of soybean meal. That means the livestock industry is going to “own” the soybean industry, according to Kerns.

    “They’ll have a lot to get out of storage. They’ll be happy to have an outlet,” he said.