Tidewater Midstream and Infrastructure Ltd T.TWM

RBN on renewable diesel

[fauxtomato]

From https://rbnenergy.com/top-10-rbn-energy-prognostications-for-2022-year-of-the-tiger

8. We’ve seen this movie before: refiners stampeding into renewable diesel (RD).  Refiners like RD. A lot. It’s made using technology that refiners have been using for decades. The federal government and a few states — especially California — provide lucrative financial incentives for producing it. RD is what’s called a “drop-in” fuel, meaning that the diesel engine in your F-250 or Silverado can’t tell the difference between RD and traditional diesel, so there is no “blend wall” problem like exists with ethanol in motor gasoline. And it has the word “renewable” right there in its name — doesn’t get any better than that! So the rise of RD should come as no surprise — the herd instinct has kicked in, as it always does in the refining sector. RD projects are proliferating across the continent. There’s about 100 Mb/d of capacity in place as of year-end 2021. Another 90 Mb/d of capacity is scheduled to come online in 2022, and by 2025 total U.S. capacity could approach 500 Mb/d. That pace of growth could pose problems on both the supply and demand sides of the equation, though. On the demand side, that’s more diesel than the states and provinces that have RD subsidies use today, which means refiners are betting that more subsidy programs will be implemented. That will probably happen, but there is no guarantee. And on the supply side, there is not enough used cooking oil (UCO) or tallow to feed all these projects, so most of the incremental feedstock would need to come straight from the farm — mostly soybean oil. Feedstock shortages are something to worry about. Could refiners kill the golden goose of renewable fuels? Probably not. But given that the economics of RD are driven by regulatory policy, there is little doubt that the realized margins from all those projects will not be quite as attractive as developers hope.