The growing role of used cooking oil in renewable diesel production

Explore how used cooking oil is gaining traction in the renewable fuels industry and the credit mechanisms available to producers

As the global community increasingly prioritizes environmental sustainability, the renewable diesel industry has emerged as a critical player in transitioning from traditional fossil fuels to greener alternatives. A noteworthy contributor to this shift is used cooking oil (UCO), a low-carbon-intensity feedstock gaining traction within the industry. This article explores how UCO is leveraged in renewable diesel production, mechanisms such as the Renewable Identification Numbers, and the additional credits available from the California Low Carbon Fuel Standard.

The importance of renewable diesel

Renewable diesel is a type of biofuel that serves as a direct replacement for conventional petroleum diesel. Unlike biodiesel, renewable diesel is chemically identical to regular diesel and can be used in any diesel engine without modifications. It is produced through hydroprocessing technology, where waste oils and fats are refined to create a cleaner-burning diesel with lower greenhouse gas (GHG) emissions.

Used cooking oil: A prime feedstock

UCO is waste oil collected from the food service industry, including restaurants, commercial kitchens, and food processing plants. Traditionally, UCO is treated as waste, often disposed of through methods that can harm the environment. However, it is increasingly recognized as a valuable resource for renewable diesel production due to its lower carbon intensity than conventional feedstocks.

Environmental benefits

Utilizing UCO for renewable diesel production offers several environmental advantages.

Reusing UCO helps reduce the amount of waste that would otherwise end up in landfills or sewage systems. UCO-based renewable diesel results in lower GHG emissions than those produced from virgin vegetable oils or animal fats.

Renewable Identification Numbers (RINS)

The Renewable Fuel Standard (RFS) established by the United States Environmental Protection Agency (EPA) uses RINS to promote the integration of renewable fuels like renewable diesel into the national fuel supply. RINS are credits that track renewable fuel production and usage within the marketplace. Each RIN is generated when renewable fuel is produced and can be traded to help refiners and importers meet their renewable volume obligations.

How RINS work

When renewable fuel is produced, RINS are generated. Each gallon of renewable diesel, ethanol, or biodiesel is assigned a unique RINS number.

Upon blending renewable fuel with petroleum-based fuel or at the point of sale, the RINS can be ‘separated’ from the physical fuel. The separated RINS can then be traded independently on the RIN market.

Refiners and importers of petroleum fuels, or obligated parties, must acquire a set amount of RINS to meet their renewable volume obligations (RVO) each year. They must purchase RINS to make up the difference if they produce or import insufficient renewable fuels.

The value of RINS is determined by market supply and demand. If renewable fuel production increases, more RINS will be available, potentially lowering their price on the market.

Low carbon intensity feedstock and RINS

Using low carbon intensity feedstocks like UCO enhances the value of RINS due to the lower lifecycle greenhouse gas emissions associated with these materials. UCO-based renewable diesel generates lower-carbon RINS, recognized within the EPA’s RFS program as a more beneficial renewable fuel due to its reduced environmental footprint.

California Low Carbon Fuel Standard (LCFS)

In addition to the federal RFS program, California has implemented its own Low Carbon Fuel Standard (LCFS) to reduce further the carbon intensity (CI) of transportation fuels used within the state. The LCFS sets annual CI targets that decrease over time, incentivizing the use of low-carbon fuels.

Additional credits from the LCFS

Under the LCFS, fuel producers generate credits when they produce and sell fuels with a carbon intensity lower than the state’s benchmark. Each credit represents one metric ton of CO2 equivalent reduced.

Similar to RINS, LCFS credits can be traded on the open market. Producers of low-carbon fuels can sell their excess credits to other fuel providers who need them to comply with LCFS requirements.

Value of UCO

Using UCO further enhances the value of LCFS credits due to its low carbon intensity score. The lifecycle assessment of UCO accounts for the waste diversion from landfills and the energy used in its collection and processing, resulting in a lower overall CI.

Synergies between RFS and LCFS

Producers utilizing UCO can benefit from the RFS and LCFS programs by receiving RINS and LCFS credits. This synergistic effect maximizes the financial and environmental benefits.

As previously noted, low-carbon-intensity feedstocks like UCO produce more valuable RINS, positively influencing the profitability of renewable diesel operations.

LCFS credits augmentation

By generating LCFS credits, renewable diesel producers in California can gain additional revenue streams, further incentivizing the use of low-carbon feedstocks such as UCO. Together, these programs provide a robust framework that promotes the production and usage of renewable diesel with significant environmental benefits.

Economic advantages for producers

The dual benefits of RINS and LCFS credits enhance the economic viability of renewable diesel, especially when using low-carbon-intensity feedstocks like UCO. Here’s how these mechanisms bolster industry profitability.

Producers can realize higher returns due to the increased value of low-carbon RINS. The elevated market price for these RINS provides a substantial economic incentive to incorporate UCO in production.

LCFS credits offer an additional revenue stream, making it more attractive for producers to exceed the required carbon intensity reductions. These credits can be sold to other entities needing to meet their obligations under the LCFS program, creating a lucrative secondary market.

UCO is often cheaper than virgin oils and fats since it is a waste product. This cost differential can significantly lower the operating costs for renewable diesel producers, enhancing their overall profitability.

Challenges and opportunities for UCO

While there are numerous benefits to using UCO in renewable diesel production, the industry faces challenges, such as supply chain logistics, quality control, and competing uses.

Collecting, transporting, and processing UCO requires efficient logistics to ensure quality and minimize contamination. Developing robust supply chain networks can be capital-intensive but essential for scalability.

UCO can vary significantly based on its collection source and prior use. Ensuring consistent feedstock quality is critical for maintaining the high performance of renewable diesel.

UCO is also used in other industries, including animal feed and oleochemical production, which can create competition for this feedstock and impact availability and price.

Despite these challenges, the opportunities presented by leveraging UCO in renewable diesel production are significant. Technology and supply chain management advances can mitigate these issues and foster greater adoption of this practice.

Future outlook

The intersection of environmental policy and technological advancements positions UCO and other waste oils as pivotal in the future landscape of renewable diesel production.

Continued support and tightening of regulations under the RFS and LCFS will likely enhance the market dynamics favoring low-carbon-intensity fuels.

Advances in hydroprocessing and pretreatment technologies could improve the efficiency and scalability of converting UCO into renewable diesel. Innovations in catalyst and reactor designs may reduce processing costs and improve fuel yields, making the process more economically viable.

As other regions and countries adopt similar frameworks to the RFS and LCFS, the demand for low-carbon-intensity feedstocks like UCO is expected to rise, driving global markets towards more sustainable fuel solutions.

The use of UCO in renewable diesel embodies the principles of a circular economy. Businesses increasingly recognize the value of waste-to-fuel initiatives, which can transform environmental liabilities into economic assets.

Waste management and sustainable fuel production

Using UCO in the renewable diesel industry exemplifies an innovative approach to waste management and sustainable fuel production. This synergy between waste reduction and renewable energy production offers environmental benefits and significant economic opportunities for businesses and communities.

As we advance, the combined efforts of policy frameworks like the RFS and LCFS, along with technological innovations and public engagement, will be crucial in harnessing the full potential of UCO in renewable diesel production. By optimizing processes, enhancing collaboration, and promoting sustainability, the renewable diesel sector can effectively contribute to the global energy transition and a more sustainable future.

Ultimately, the dynamic interplay between waste reduction and renewable energy presents a model for future industrial practices, demonstrating how sustainable solutions can be economically viable and environmentally beneficial. Like other refining businesses, the cyclical nature of opportunity is market-based and consistently changes.

The renewable diesel industry can lead the charge toward a lower-carbon economy through strategic actions and continued innovation, setting a standard for other sectors.

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