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Used cooking oil, a renewable fuels feedstock, nearly 'tapped out' in U.S. -Valero

04/22/2021 | 01:54pm EDT

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 standard.

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)

© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
CORN FUTURES (C) - CBR (FLOOR)/C1 1.74% 772.75 End-of-day quote.55.63%
LONDON BRENT OIL -0.07% 68.2 Delayed Quote.32.53%
SOYBEAN OIL FUTURES (ZL) - CBE (ELECTRONIC)/C1 0.20% 66.38 End-of-day quote.52.90%
WTI -0.07% 64.833 Delayed Quote.35.13%
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