White Paper Highlights the Benefits, Opportunities and Challenges of Renewable Diesel

September 13, 2017

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Renewable diesel is doing its part to help ensure that heavy-duty vehicles with diesel engines can achieve the level of environmental performance needed to perpetuate their sales well into the 21st century. Any on-road heavy-duty vehicle fuel-engine platform that will be sold in California beyond the 2030 timeframe will likely be required by the California Air Resources Board (CARB) to achieve near-zero-emissions of key air pollutants (especially oxides of nitrogen, or “NOx”), and to use a low-carbon-intensity renewable fuel.

Although not all renewable diesel offers a reduced carbon intensity (depending on the feedstock and how its produced), the renewable diesel used in California’s transportation sector achieves a 66 percent lower carbon intensity rating than petroleum diesel. This “drop-in” replacement for diesel is already delivering major greenhouse gas (GHG) reductions, with renewable diesel consumption in California’s transportation sector now exceeding 250 million gallons per year.

However, on the engine side of the fuel-engine equation, the longer-term viability of heavy-duty diesel engines in California rests on the ability for diesel engine technology itself to achieve near-zero-emissions status. This is generally defined as being 90% cleaner than the current NOx emission standard.

Over the last several years, California has become a test-bed for renewable diesel use, where it is allowing cities such as San Francisco, Oakland, San Diego and Los Angeles to achieve compelling GHG reductions, while also significantly contributing to much-needed improvements in air quality. The latter is true because renewable diesel reduces tailpipe emissions of NOx and particulate matter (PM) when used to replace petroleum-derived diesel in older on-road heavy-duty diesel vehicles, and most off-road diesel vehicles and equipment.

The report found the following advantages offered by renewable diesel as a replacement for petroleum diesel:

  • It can be produced from a wide array of renewable, low-carbon-intensity feedstocks using existing oil refinery capacity; thus, extensive new production facilities will not be required for expanded renewable diesel use;
  • It is substantially similar to ultra-low-sulfur diesel in its physical and chemical characteristics; this means renewable diesel has no “blend wall” and can be directly used in existing diesel-powered vehicles and ultra-low-sulfur diesel infrastructure without need for hardware and materials changes;
  • It has a high cetane number and other beneficial qualities that collectively enable heavy-duty vehicles to reduce their engine out NOx and PM emissions by an average of 13 percent and 29 percent, respectively, while providing equivalent vehicle performance and near-equivalent fuel efficiency;
  • It can deliver these benefits in any type of diesel engine application (on- or off-road, medium- or heavy-duty), subject to certain limitations described in the White Paper;
  • It appears to significantly improve performance and reduce life-cycle costs of diesel particulate filters (DPFs), which are widely used to control PM emissions on post-2006 on-road HDVs (and some off-road HDVs).

For all these positive attributes, many end users refer to renewable diesel as a “wonder fuel.” Clearly, renewable diesel does offer important benefits for user fleets and the general population – especially by providing “across-the-board” GHG reductions in all diesel engines that consume it instead of petroleum-derived diesel. However, renewable diesel does not constitute a widely impactful or sustainable strategy to improve ambient air quality in California or the broader U.S. Its abilities to help reduce ozone-precursor NOx emissions and toxic air contaminants (especially DPM) are limited by the breadth of diesel-engine applications for which it can provide such benefits and the time frame over which they can be derived. This is because, based on limited but robust data, renewable diesel does not significantly reduce NOx emissions from diesel engines equipped with selective catalytic reduction (SCR), nor PM emissions from diesel engines equipped with DPF technology.

However, most off-road diesel HDVs and equipment are not equipped with SCR and DPF technology, and it will take many years for this transition to occur. Thus, renewable diesel use in the off-road sector will likely provide the most important air quality benefits in California, especially in the South Coast Air Basin (SCAB). CARB’s proposed “Low-Emission Diesel” (LED) regulation seeks to direct more than a billion gallons of renewable diesel per year specifically to fuel heavy-duty off-road vehicles operating in the SCAB. This switch from petroleum-derived diesel to renewable diesel in off-road HDVs and equipment will provide major GHG reductions from California’s transportation sector. Localized NOx and PM reductions in the SCAB will be relatively small, but nonetheless important for improving ambient air quality. Gradually (over decades), all in-use diesel engines in the SCAB and throughout California will incorporate advanced emission controls like SCR and DPFs (or, they will be replaced by alternative fuel HDV platforms that achieve near-zero-emission or zero-emissions levels). Thus, based on current knowledge, this will negate any additional benefits renewable diesel can contribute to NOx and PM reductions in California.

In effect, the San Francisco Bay Area and southern California are serving today as national testbeds for early renewable diesel consumption, with the primary focus being on-road HDVs. It appears that, on a trial basis, use of renewable diesel is beginning to expand into certain off-road applications (e.g., ferries, harborcraft, and in-State locomotives). This increasing demand is likely to push renewable diesel consumption in California well beyond the quarter-billion gallons that are currently being transacted under LCFS-covered transportation applications. In particular, CARB’s draft LED regulation seems likely to direct most of the State’s renewable diesel supply by 2030 away from on-road HDVs, for use in off-road applications operated in the SCAB.

There is sufficient volume of renewable diesel being imported into California today (at least 250 million gallons) to meet near-term demand. However, ability to meet longer-term demand is less certain. Over the next decade, renewable diesel demand in California is expected to grow by (roughly) an order of magnitude, possibly approaching two billion gallons per year. In preliminary assessments, CARB has identified multiple feasible pathways that can technically and economically meet such demand. CARB estimates that 2.6 billion gallons of renewable diesel supply for California will be possible by 2030. Notably, these types of estimates by CARB are intentionally designed to provide reasonable scenarios, but they are not meant to make hard projections.

California’s Low Carbon Fuel Standard, and a similar program in Oregon, provide strong incentive for the production and use of low-carbon transportation fuels like renewable diesel. However, outside these markets, it can be very hard to obtain renewable diesel. National demand for renewable diesel appears to already be exceeding supply, especially in the eastern U.S. where some major HDV fleets like United Parcel Services and the New York City Department of Sanitation have not been able to purchase enough renewable diesel. When it is obtainable in such places, renewable diesel can cost much more than petroleum diesel, especially when purchased in small volumes. This can make renewable diesel unaffordable to HDV fleets as a GHG-reduction strategy. The challenges that make the renewable diesel-supply picture uncertain for California as well as nationwide include 1) the relatively small capacity of current production in the U.S. (particularly within California), 2) competing uses for renewable diesel’s major feedstocks, and 3) concerns about non-sustainable and/or environmentally harmful feedstocks such as palm oil.

Given these current and future dynamics, there appears to be an important need for local air districts in both Southern and Northern California to better understand the impacts of renewable diesel on NOx and PM emissions in a wide diversity of on- and off-road heavy-duty diesel engines. This can help inform strategies involving renewable diesel’s potential role in new regulatory efforts (e.g., indirect source regulations, facility cap requirements, incentives, etc.). From a statewide perspective, it also seems important to conduct further study about the dynamics of renewable diesel supply and demand in California (e.g., competing uses for feedstocks, where the supply will most be needed, etc.).

Specific recommendations of this White Paper include (but are not limited to) the following:

Conduct trials of renewable diesel in high-horsepower off-road applications and select on-road applications

  • Air districts should consider funding trials of renewable diesel in high-horsepower off-road applications such as marine vessels and locomotives. In particular, the South Coast Air Quality Management District (SCAQMD) could work with railroads and other local stakeholders (e.g., the San Pedro Bay Ports) to conduct such a trial on one or more locomotives. The Bay Area Air Quality Management District (BAAQMD) and the City of San Francisco could work with ferry operators serving the San Francisco Bay to test renewable diesel in one or more ferry vessels. (This process has recently been initiated.)
  • The BAAQMD and CARB may want to work with stakeholders associated with the Port of Oakland drayage truck fleet (e.g., licensed motor carriers, port authorities) to sponsor a controlled test on the use of renewable diesel in the fleet, specifically to determine if switching the fleet to renewable diesel can help improve DPF performance and durability.

Conduct further emissions studies on the impacts of renewable diesel on HDVs with state-of-the-art emissions controls

  • CARB should continue working with air districts, academic institutions, the heavy-duty engine industry, and possibly renewable diesel producers / suppliers to conduct focused emissions testing programs designed to better characterize the impacts of renewable diesel on heavy-duty diesel engines with advanced emissions controls. (A major new test program is now being developed by CARB, SCAQMD, and the California Energy Commission.)

Conduct a focused assessment in California of renewable diesel supply and demand

  • CARB and the California Energy Commission should take the lead to further study the potential future supply and demand dynamics for renewable diesel as a major transportation fuel in California.

Download the full White Paper here.