April 22 (Reuters) - Used cooking oil, a feedstock fueling
America's renewable diesel boom, is running in short supply,
according to U.S. refiner Valero.
The refiner is expanding its renewable diesel production
capacity in St. Charles, Louisiana as part of its joint venture
with Diamond Green Diesel. The plant should be able to produce
an additional 400 million gallons per year of renewable diesel
by the fourth quarter of 2021, executives said on the refiner's
first-quarter earnings call on Thursday.
The fuel will be made from feedstocks such as used cooking
oil, animal tallow and distillers corn oil, said Martin Parrish,
senior vice president of alternative fuels at Valero.
Animal tallow and used cooking oil are deemed less carbon
intense than soybean and other vegetable oil and thus generate
more tradable credits under California's low-carbon fuel
This has driven up prices and demand for the feedstocks as
refiners and other producers compete for supply to profit off of
state and federal regulations and tax credits.
"Used cooking oil is pretty close to being tapped out right
now in the U.S.," Parrish said.
Renewable diesel has been tremendously profitable for
Valero, an early mover that secured ample supply of advantaged
feedstocks with low carbon intensity.
Valero's renewable diesel segment a record operating income
in the segment of $203 million in the first quarter of 2021.
"The biggest advantage is the carbon intensity score of
those oils, those waste oils, compared to a veg oil or compared
to the soybean oil in most jurisdictions," said Parrish.
The refiner expects to be able to sell into Canada and other
states that adopt low carbon fuel standards.
"By having our robust pretreatment system, our location, our
ability to run anything is just a huge advantage," he said.
(Reporting by Laura Sanicola; Editing by Cynthia Osterman)