North American biofuel production will double to 10 billion gallons by 2030, marking a transformation from niche to mainstream maritime fuel solution, according to Chevron Renewable Energy Group (CREG) executive director of strategic initiatives Jon Scharingson.
Speaking at Marine Propulsion’s Maritime Decarbonization Conference Americas, Jon Scharingson revealed dramatic shifts in market dynamics since IMO 2020, “We hadn’t sold a drop into marine markets before 2020. Suddenly, people were flying to Iowa in -25F-degree temperatures during Covid to understand our capabilities.”
CREG’s current production capacity for biodiesel and renewable diesel stands at 750 million gallons annually, distributed across nine biorefineries. These facilities are located in seven US states and two European countries, with production evenly split between biodiesel and renewable diesel. A significant portion, 75%, of the feedstock used comes from waste oils and fats, including used cooking oil (UCO), animal fats, and distillers corn oil (DCO) from ethanol production.
Key market barriers include a more than $1 per gallon premium for the marine sector due to Renewable Identification Number (RIN) credits under the Renewable Fuel Standard (RFS) being invalid for ocean-going vessels. Additionally, European International Sustainability and Carbon Certification (ISCC) requirements increase costs, while competing demand from the aviation sector and EU restrictions on crop-based feedstocks present further challenges.
“There’s a misperception about food versus fuel,” Mr Scharingson explained. “Crops like soybean and canola are grown for protein to feed livestock. The oil is actually a byproduct. We need to talk about food and fuel, not food versus fuel.”
Future market dynamics for renewable fuels in the marine sector are poised for significant changes. Potential legislation could extend RFS RIN credits to include the maritime sector, potentially lowering costs and increasing demand for biodiesel and renewable diesel as marine fuels. However, competition from the aviation sector might redirect renewable diesel production volumes towards sustainable aviation fuel (SAF) production as demand and value for SAF increase. Despite this, biodiesel is seen as a long-term solution for marine applications due to its drop-in capabilities and cost efficiency.
Addressing feedstock concerns, Mr Scharingson noted while 60% of current US industry production uses crop-based oils, Chevron maintains a higher percentage of waste oil feedstocks. “The more feedstock flexibility customers have, the more product availability and better economics they’ll see,” he emphasised. Additionally, there is a growing need for broader sustainability documentation beyond the current ISCC requirements to meet evolving market demands.
Mr Scharingson stressed the need for multiple solutions, “We’re building a long bridge with biofuels, but it’s going to take an all-of-the-above approach. However, we’re completely understating the renewable electricity requirements for growing global demand across all sectors.” Additionally, there is a growing need for broader sustainability documentation beyond the current ISCC requirements to meet evolving market demands.
The company has already commercialized B100 fuel for marine use, with successful implementations including routes from Seattle to Alaska, demonstrating immediate practicality while addressing technical challenges such as cloud point management. There are also growing volumes being utilized in “lakers” and ocean-going vessels operating on the Great Lakes.
Originally shared by Riviera, December 9, 2024. Updated for clarity and purpose.