Demand for Biomass-based Diesel Fuels Presents a Growing Opportunity

Bailey Arnold for Michigan Advanced Biofuels Coalition

The Environmental, Social, and Governance (ESG) movement has taken the corporate world by storm in recent years as government regulations and an increasing percentage of consumers demand action to address climate change and global inequity. In response, many companies have made public commitments to address greenhouse gas (GHG) emissions and set detailed plans to achieve them, often establishing short- and long-term goals. To address these goals, a growing list of companies, and in some cases, entire industries, have begun turning to biomassbased diesel (BBD) fuels like biodiesel, renewable diesel, and sustainable aviation fuel for their ability to significantly reduce GHG emissions with little or no modifications.

While increasing demand for biodiesel (BD), renewable diesel (RD), and sustainable aviation fuel (SAF) presents an opportunity for significant industry growth and innovation, it has also created many questions around the differences and similarities between the fuels and the respective markets they serve. These questions are undoubtedly a good thing for the industry, because it means the fuels are growing in market share and popularity.

The Michigan Advanced Biofuels Coalition, a coalition of stakeholders that promotes the use of advanced biofuels, in collaboration with the Michigan Soybean Committee, United Soybean Board and Clean Fuels Alliance America, are all working to answer questions and clear up any confusion surrounding the growing number of sustainable diesel fuel options available today.

In land, sea and rail operations, BD and RD help to displace the use of carbon intensive fuels such as ultra-low sulfur diesel fuel (ULSD), the standard for highway diesel fuel in the United States since 2010. In 2021 alone, biodiesel and renewable diesel displaced 3.1 billion gallons of petroleum-based diesel fuel in the United States. By 2030, the industry is expected to displace as much as 6 billion gallons, or approximately 10 percent of the distillate fuel market in the United States.

Similarly, the introduction of sustainable aviation fuel helps to displace the use of petroleum jet fuel like Jet A, the primary jet fuel used in the United States. Production of sustainable aviation fuel is expected to grow from a few million gallons in 2021 to as much as three billion gallons annually by 2030 – approximately 15 percent of the aviation fuel market in the United States.

Today, around 90 percent of the fuel used to power planes, trains, automobiles and ships in the United States is petroleum based. Transitioning from petroleum-based fuels to BBD fuels has been shown to significantly reduce harmful air pollutants and carbon emissions. While the latter lessens the U.S. transportation sector's impact on climate and the environment, the former improves air quality and helps to protect human health. A recent study by Trinity Consultants showed that a simple switch to cleaner fuels like biodiesel would provide immense health benefits to local communities.

The low-carbon feedstocks used to produce renewable diesel, sustainable aviation fuel and biodiesel have historically been the same, comprised largely of soybean oil, distillers corn oil (a by-product of ethanol production), used cooking oil, canola oil and animal fats. However, new and advancing technologies are creating opportunities for the industry to begin producing BD, RD and SAF from new feedstocks, like camelina and algal oils. Because of their unique production pathways, there is also growing opportunity to produce RD and SAF from waste products like municipal solid waste and agricultural residues.

While biodiesel, renewable diesel and sustainable aviation fuel are produced for use in diesel engines, they are distinct fuels with differences from production to storage and handling to end-use. The quality standards and specifications for each fuel or fuel blend also differ greatly.

Biodiesel

Biodiesel is a biodegradable and non-toxic advanced biofuel produced domestically from a diverse pool of renewable oils and fats. The finished fuel is produced through a process known as transesterification which

...continued from previous page gasoline), renewable propane (RLPG) and sustainable aviation fuel. These byproducts can be fed back into the system during the production process or sold on the market. In most cases, like BD and RD, the byproducts qualify for Renewable Identification Numbers (RINs), a credit generated for every gallon of renewable fuel produced under the Renewable Fuel Standard (RFS). The products are also incredibly valuable under programs like California’s Low Carbon Fuel Standard (LCFS).

Sustainable Aviation Fuel

Sustainable aviation fuel is an umbrella term that refers to aviation fuels that are derived from renewable feedstocks through one of seven approved pathways. SAF is intended for use in existing aviation equipment. In its pure form, SAF meets ASTM D7566. Upon blending with petroleum jet fuel, SAF is certified to ASTM D1655 and regarded as conventional Jet A or Jet A1 kerosene.

SAF is a key decarbonization strategy for all the United States’ major airlines, including United, Delta, American, Southwest and more. Seen as a drop-in replacement for petroleum jet fuel, SAF provides upwards of an 80 percent reduction in carbon emissions when compared to petroleum jet fuels. However, SAF is currently limited to a maximum blend of 50 percent SAF and 50 percent petroleum jet fuel due to SAF’s naturally low levels of aromatics, a requirement for efficient operation in most aviation engines.

SAF production is expected to grow to three billion gallons by 2030 and as much as 50 billion gallons by 2050 under an ambitious plan set forth under the U.S. Department of Energy’s SAF Grand Challenge. If the projected growth continues and innovative production processes become reality, the International Air Transport Association (IATA) estimates that SAF could contribute up to 65 percent of the reduction in emissions needed for the aviation industry to reach net-zero emissions in 2050.

Crush the Competition

In the U.S., the shift toward decarbonization, coupled with corporate ESG commitments and a vast array of new government incentives, is furthering the demand for low-carbon fuels like biodiesel, renewable diesel, and sustainable aviation fuel. On top of expanding domestic BBD fuel production, the movement is sparking investments in new feedstocks and expanded oilseed crush capacity to supplement current supplies. These advancements, coupled with carbon sequestration practices on the farm, are leading a sustainable revolution that is certain to benefit U.S. farmers by providing a robust and growing market for their products. The Michigan Soybean Committee and Michigan Advanced Biofuels Coalition are invested in staying engaged in this industry and driving demand for Michigan-grown soybeans.