Renewable Biofuels

Diesel fuel is a refined product from crude oil. According to the U.S. Energy Information Administration, the nation’s oil and gas industry produced just over 11.1 million barrels of crude oil in 2021 and is on track to produce 11.85 million barrels a day in 2022.

Diesel is considered a middle distillate fuel alongside jet fuel, home heating oil, kerosene, and other fuel oils. Gasoline, the major petroleum product derived from a barrel of crude oil, is made from lighter portions of crude oil during the refining process. In a typical refinery, one barrel of crude oil (42 gallons) yields approximately 19-20 gallons of gasoline and 11-12 gallons of diesel fuel, with the balance being lesser products.

Since 2006, EPA rules required a transition to ultra-low sulfur diesel (sulfur < 15ppm at the pump). This fuel has been the standard fuel in the fleet of on-road vehicles in the US and since 2010 for all diesel vehicles both on and off road. Approximately 44 billion gallons of ultra-low sulfur diesel fuel were consumed in the United States in 2021. All diesel fuel in the country must meet the standard fuel specification established by the American Society of Testing and Materials (ASTM) D975-21 specification. Most developed countries have also switched to a similar ULSD standard fuel type to facilitate more stringent emissions standards.

Diesel fuel is widely available throughout the world. In the US Nationwide, more than half of all retail fueling facilities offer diesel fuel including convenience stores. 

Heavy-duty users, including trucks, buses, and off-road equipment have easy access to diesel fuel through public retail stations such as truck stops and travel centers. Most private and government fleet maintain their own fleet fueling locations. Off road engines and equipment are also serviced while on the jobsites by mobile fuel delivery services.

The price of diesel fuel in the US is determined by four factors: the price of crude oil accounts for about 53%, distribution and marketing (17%), refining costs (16%), and taxes (14%).

The federal government  imposes a 24.3 cents-per-gallon tax on diesel fuel, while the tax on gasoline is 18.3 cents-per-gallon. Almost every state also levies a diesel tax. The average is about 33 cents per gallon. Considering local taxes and fees, the average result is about 62 cents per gallon tax and fees levied on the sale of a gallon of diesel fuel. This compares to 55 cents per gallon of gasoline.

Changes in the global demand and inventories for finished distillate products including diesel also explain some price fluctuation. General economic growth boosts demand for goods movement including trucking, rail, and marine uses, all of which are powered predominately by diesel. Seasonal variations in diesel demand occurs at various times, such as a boost in demand for diesel in off-road farming equipment during spring planting and fall harvest seasons. Extreme cold weather in areas like the Northeastern US that rely heavily on home heating oil competes with the supply of diesel fuel for transportation use. Otherwise, demand for diesel is driven by global economic conditions.

For more information about current energy prices visit the U.S. Energy Information Administration at www.eia.gov

Originally designed to operate on peanut oil over 130 years ago, today’s diesel engines are utilizing more high-quality blends of biodiesel and renewable diesel fuels in both new and existing engines of all ages and types. 

Both biodiesel and renewable diesel fuel are derived from waste agricultural feedstocks. Oil derived from soybeans, canola, corn, and waste animal fats make up the largest feedstock for these fuels, according to the U.S. Energy Information Administration. In addition to these feedstocks, renewable energy producers are exploring other potential sources such as cover crops and algae.

Both biodiesel and renewable diesel are considered low-carbon advanced biofuels that reduce greenhouse gas emissions by a minimum of 50% and up to 86% depending on feedstocks. The difference between biodiesel and renewable diesel is not the feedstocks but the processing. Biodiesel is a fatty-acid methyl ester (FAME) compound. Biodiesel is typically used in the US in blends with petroleum diesel. The 20% blend level known as B20 is among the most popular and available.

Renewable diesel uses the same basic feedstocks but has a more sophisticated refining process that results in the output of a relatively pure paraffinic compound known as hydrogenated vegetable oil (HVO) often referred to as renewable diesel fuel. This product’s characteristics, including ignition properties in the engine and stability of the fuel, are among the features that enable it to be considered a drop-in replacement for ultra-low sulfur petroleum diesel. Renewable diesel can be blended with any amount of ULSD and can be used in any concentration including up to 100%.

Most heavy-duty diesel engines are capable of operating on blends of ultra-low sulfur petroleum diesel and biodiesel up to 20%, known as B20. Lesser concentrations (B5, B10, etc. are also found in some parts of the country.)  Some diesel engines are approved to operate on higher blend levels. Renewable diesel fuel is produced to meet the same engineering standard as petroleum diesel fuel and can be used as a 100% replacement fuel to petroleum.

Source: U.S. Energy Information Administration

Relative to petroleum diesel fuel, the consumption of these advanced biofuels is relatively small but growing.

The Renewable Fuel Standard (RFS) program was created under the Energy Policy Act of 2005 (EPAct), which amended the Clean Air Act (CAA). The Energy Independence and Security Act of 2007 (EISA) further amended the CAA by expanding the RFS program. EPA implements the program in consultation with U.S. Department of Agriculture and the Department of Energy. 

The RFS program is a national policy that requires a certain volume of renewable fuel to replace or reduce the quantity of petroleum-based transportation fuel, heating oil or jet fuel. The four renewable fuel categories under the RFS are:

• Biomass-based diesel
• Cellulosic biofuel
• Advanced biofuel
• Total renewable fuel

Biomass-based biodiesel reduces lifecycle carbon emissions by 50% or more.

In addition to the federal RFS program, regions like California and the Pacific Northwest that incentivize low carbon transportation fuels have been the driving force behind most industry growth. In 2021, about 3.2 billion gallons of biodiesel and renewable diesel were produced in the country. Industry organizations – the Clean Fuels Alliance America-- project 5 billion gallons of biodiesel and renewable diesel by 2030.

Oil industry analysts also note that based on projected refining investments, the volumes of renewable diesel fuels could surpass the entire 2019 diesel demand in the state of California.

Low-carbon renewable and biodiesel fuels are available at an increasing number of fuel retailer and fleet locations. According to the Alternative Fuels Data Center 763 public stations in the US dispense biodiesel fuel (B20 and above). Most trucking and equipment fleets own and operate their own private fueling depots and their use of biofuels is not reflected in this count. California’s low carbon fuel standard results in biodiesel and renewable diesel being blended into the mainstream diesel fuel pool for all public and private users in California.

Both biodiesel and renewable diesel fuel are considered advanced biofuels by the U.S. Environmental Protection Agency defined as reducing greenhouse gas emissions by at least 50%. Renewable diesel fuel is capable of reducing greenhouse gas emissions upwards of 80%. The use of these fuels is generating large greenhouse gas reduction benefits with least cost compared to other alternatives.

The federal Renewable Fuel Standard (RFS) mandates the use of certain biofuels blended into petroleum-based diesel and gasoline in an effort to grow domestically sourced fuel with the capability of reducing greenhouse gas emissions. Nationwide, the Renewable Fuel Standard requires the use of biofuels, including biodiesel and renewable diesel fuel. Both California and Oregon require the gradual reduction in the carbon content of transportation fuels sold in the state through Low Carbon Fuel Standards. Biodiesel and renewable diesel fuel are generating the greatest reduction in greenhouse gas emissions in the transportation sector. In California, these benefits exceed those from the electrification of cars, trucks, and buses by almost 4 to 1.

SOURCE: Low Carbon Fuel Standard Dashboard

A key advantage to the use of renewable biofuels is that compared to competing alternatives, they do not require the purchase of new vehicles, equipment, or engines. They also do not require expensive, additional, investments in refueling or recharging infrastructure. Their benefits can be realized immediately across entire fleets of vehicles, rather than only in newly acquired vehicles dependent on new infrastructure. Biodiesel and renewable diesel fuels can be stored, used, pumped, and handled virtually the same way as petroleum diesel products.

The price of renewable diesel and biodiesel fuels generally compares favorably with petroleum diesel in most regions. For the most up-to-date pricing information, check with local fuel retailers and suppliers.

Driving a global economy requires a steady supply of available, affordable, and diverse energy sources. As the prime mover of the global economy, diesel technology continues to evolve to use the fuels more efficiently and with fewer emissions. That’s why the new generation of diesel engines, fuels and equipment will continue to play a dominant role powering essential services and key sectors of the economy. In the future, we can expect to see more alternative fuels hit the market including zero-emissions technologies such as battery electric and hydrogen fuel cell trucks and equipment. As these alternatives make some in-roads, ULSD and advanced biofuels will still play a dominant role in our economy.