With sustainability initiatives and clean-air regulations increasingly grabbing news headlines around the world, it should come as no surprise that today’s companies are seeking out alternative fuels that are more environmentally friendly. Renewable diesel is one such alternative fuel, and is often referred to as “green diesel”. The “green” refers to the fact that renewable diesel is biomass-based, produced through thermochemistry processes. According to the U.S. Energy Information Administration, the biomass materials used in production can include crop residues, wood and sawdust, and switchgrass. Because renewable diesel is chemically the same as petroleum diesel, this green diesel can easily be used in pipelines, tanks, and engines originally meant for petroleum diesel fuel.
A look at three large U.S. refiners on Visible Alpha Insights offers a view of renewable diesel production levels for Valero Energy (VLO_US), Marathon Petroleum (MPC_US), and Phillips 66 (PSX_US). Below the series of charts, we offer some highlighted insights.
We see that Valero Energy, the second-largest producer of renewable diesel in the world and the largest in the U.S., with planned expansions, is set to increase its production levels by a CAGR of ~30% over the next four years. Much of this growth is expected to be driven by two new plants in Louisiana and Texas that are planned to be operational by 2H 2023.
Also interesting are analysts’ expectations that Phillips 66 will see a massive uptick in 2024, driven by the company’s announcement of plans to convert its Rodeo Refinery into one of the world’s largest renewable fuels facilities, capable of producing 800 million gallons per year of renewable diesel, renewable gasoline and sustainable aviation fuel from used cooking oils, fats, greases, vegetable oils, and other feedstocks. The project, subject to permits and approvals, is expected to be completed by early 2024.
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