(HOUSTON) — North American biofuel production will double to 38 billion liters (10 billion U.S. gallons) by 2030, marking a transformation from a niche maritime fuel to a mainstream solution, according to Chevron.
Speaking at Marine Propulsion’s Maritime Decarbonization Conference Americas last week in Houston, Jon Scharingson, executive director of strategic initiatives for Chevron Renewable Energy Group, 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 minus 25-degree temperatures during Covid to understand our capabilities,” he said.
The current production capacity for biodiesel and renewable diesel stands at 2.84 billion liters annually, distributed across nine refineries. These facilities are located in seven U.S. states and two European countries, with production evenly split between biodiesel and renewable diesel. A significant portion, 75 percent, of the feedstock used comes from waste oils, including used cooking oil, animal fats and distillers corn oil from ethanol production.
Key market barriers include a $1.05 per gallon premium (U.S.) for the marine sector due to Renewable Identification Number credits being invalid for ocean vessels. Additionally, European International Sustainability and Carbon Certification (ISCC) requirements increase costs, while competing demand from the aviation sector and European Union restrictions on crop-based feedstocks present further challenges.
“There’s a misperception about food versus fuel,” Scharingson said. “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 Renewable Identification Number benefits to 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 toward sustainable aviation fuel production.
Despite this, biodiesel is seen as a long-term solution for marine applications due to its cost efficiency. Additionally, there is a growing need for broader sustainability documentation beyond the current ISCC requirements to meet evolving market demands.
Addressing feedstock concerns, Scharingson noted while 60 percent of current U.S. 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 said.
Scharingson stressed the need for multiple solutions, saying, “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.”
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.
– Riviera Maritime
