Name: Star Oilco
Address: 232 NE Middlefield Rd., Portland, OR, 97211, United States
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January 2, 2025

Why diesel fuel in Oregon may go up in 2025 https://staroilco.net/wp-content/uploads/2024/10/3.png 940 788 Star Oilco Star Oilco //staroilco.net/wp-content/uploads/2022/10/StarOilco-Logo-RGB-C-Lg-Simple.png January 2, 2025 January 7, 2025

Why diesel fuel in Oregon may go up in 2025

What are the market forces impacting diesel in Oregon for 2025?

There are some big changes coming for diesel fuel in Oregon and it is not widely reported. The biggest likely change being a smaller supply of renewable diesel in the first quarter of 2025. Renewable Diesel is expected to see a shorter supply than in recent years as imports drop off with the removal of subsidies.

Oregon is going to see several major market forces impacting the wholesale, as well as retail cost of diesel to those that buy it. To list them simply, the following events will converge on New Years Eve:
– The end of the $1 a gallon US Blenders Tax Credit (BTC) subsidy on biodiesel and renewable diesel.
– The subsidy replacing the BTC, the Producers Tax Credit (PTC), blocks imported biofuels such as Neste Renewable Diesel.
– Oregon is relaunching its Climate Protection Program which will cap the market allowance for fossil fuels.
– Portland has a Renewable Fuels Program that requires the blending of Biodiesel and Renewable Diesel under a 60% reduction in CO2 emissions from petroleum diesel (biofuels sold in Portland must be below a 40CI under Oregon’s Clean Fuels Program).
– California has mandates for Renewable Diesel in many uses raising the cost of R99 renewable diesel throughout the US.

These forces will raise the cost of fossil fuel diesel, renewable diesel and biodiesel while at the same time Oregon and Portland are requiring the use of these biofuels. This will mean a higher retail and wholesale price inside Oregon compared to the rest of the United States. We cover the details of these trends below in depth.

THE OREGON CLIMATE PROTECTION PROGRAM

The biggest change impacting the price for on-road diesel is the return of Oregon’s Climate Protection Program (CPP). The program’s more common name is Cap and Invest, in fuel pricing it is referred to as “Cap at the Rack” as its allowance requirements are priced on a gallon of fossil fuel. The program caps the total fossil fuel allowed to be sold inside Oregon. Then, revenue generated from selling the allowances to import CO2 contributing fossil fuels into the state, is invested to reduce future needs for these fuels. In 2025, this program will return and fuel importers into the state of Oregon will have to capture the cost of reducing their CO2 emissions under this program.

Oregon previously had a “Cap and Invest” program limiting the total market share allowed for petroleum diesel fuels. This created a higher cost for diesel fuels refined from petroleum compared to renewable diesel and biodiesel. This program was stopped by an Oregon court decision in 2023. The Oregon Department of Environmental Quality (DEQ) just finished and published the new rules for this program correcting the issues the court had with the program.

The way the Oregon Cap and Invest works on the market is similar to musical chairs. If you imagine the market for diesel is limited just like seats in musical chairs, every year they will take a few of the fossil fuel chairs away. That means that anyone maintaining their existing customer gallons or trying to grow their volumes must meet this demand with renewable diesel, biodiesel or some other fuel. The limited market for fossil fuels is represented by “Allowances” provided by the Oregon DEQ. If a fuel seller cannot reduce their fossil fuel dependency, they need to buy a CPP Allowance in an Oregon DEQ curated market for them.

The value of these CPP Allowances is actually charged on each gallon of fuel sold by the regulated parties. It is commonly called “Cap at the Rack” and can range in cost from nothing to over $.50 a gallon depending on how hard it is to meet the need of the program. The biggest impact on the Cap at the Rack cost is how much renewable diesel or biodiesel is being used by those selling fuel. Prior to the stoppage of Oregon’s CPP program, the Cap at the Rack cost usually ran around $.05 to $.30 a gallon. It is expected we will see a return to this cost starting January 1st, 2025. OPIS reports have an adjusted and non-adjusted option to capture the cost of this program.

The way the CPP program is designed is that if a fuel seller brings in a lower CO2 fuel like renewable diesel or biodiesel into the state of Oregon those gallons do not count towards the fossil fuel market cap. So a R99 seller has no CPP Allowance obligations for those gallons. A B20 biodiesel blender, as well, picks up 20% more gallons available to sell as those biodiesel gallons do not count against their CPP Allowances. This facet of the CPP is why the market of renewable diesel in particular is a big deal for diesel prices.

The intent of Oregon is for consumers, fleets, farmers, municipalities, and industry in Oregon to grow their energy needs, they will need to use more low carbon energy. If this energy use is a fleet running over 32,000 GVW this will mean low CO2 biomass based diesel fuels. At the same time, the CPP program is kick-starting back into existence, the world of these biofuels is seeing some major market changes.

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OREGON CLEAN FUELS PROGRAM

Oregon has another program to reduce the CO2 of the liquid fuels sold inside the state. This program is additional and works in conjunction with the CPP. It is the Clean Fuels Program (CFP) and is extremely similar to the California Low Carbon Fuel Standard (LCFS). This program creates a market for Carbon Credits that are traded and required by fuel importers into Oregon. OPIS also shows this program’s cost per gallon on their reporters.

Where the Climate Protection Program is like musical chairs with market share as the allowed market for fossil fuel shrinks year over year, the Clean Fuels Program is like a coupon required with sales of fossil fuel. The major importers of fossil fuels into Oregon must show they are blending lower CO2 biofuels by presenting CO2 credit generated under the CFP program. Users of fuel inside Oregon also see a benefit for bringing in low CO2 fuels when the market needs the credits so that voluntary users of high blend biofuels like R99, B99, B20 or E85 (85% ethanol) get financial support via a reduced final cost per gallon if using those fuels.

The reason we see renewable diesel in Oregon compared to the rest of the United States is because of this program. This value of a Carbon Credit is usually taken to buy down the competitive price of these biofuels. The concept is that if a fuel importer is bringing low CO2 fuels into Oregon, the reduction in CO2 these fuels represent can generate a CO2 credit. That credit being sold on an open market to help reduce the cost of a low CO2 fuel compared to a fossil fuel. The market for these credits is banked and has been building for years. Currently, the CO2 value is low as there are plenty of credits.

If the market availability of renewable diesel and biodiesel is dropping, the value of these credits should be rising. The overall market will be bearing this cost though consumers will likely never see it. In effect these regulatory market impacts of less renewable diesel in Oregon will mean a higher Carbon Credit price under the CFP program. That will help lower the blended or delivered costs of B99 biodiesel and R99 renewable diesel hitting the end consumer.

RENEWABLE DIESEL AND BIODIESEL SUPPLY IN OREGON

Biodiesel and renewable diesel are called “Biomass Based Diesel” as a respective class of biofuels. Where fossil fuel diesel is made from crude petroleum, biomass based diesels are diesel fuels made by several technologies from biomass feedstocks. The most widely used feedstock being fats, oils, and greases from virgin vegetable seed oils (soy and canola) or waste streams like recycled deep fryer oils, meat processors rendering fats, recovered trap greases, and many other sources of fat waste streams.

The 2025 Oregon Fuels Forecast for Oregon predicts a 199+ million gallon need for R99

The Oregon Department of Administrative Services Office of Economic Analysis produces a Clean Fuels Forecast which describes the size of the market need in Oregon. In 2023, Oregon used 133.3 million gallons of R99 inside the state. The fossil fuel diesel used in 2023 was 577.6 million gallons by comparison. So R99 and B99 blended with those gallons is a substantial 26% of the diesel burned in Oregon by the most recent total data. The forecast for 2024 Renewable Diesel is 46.6 million gallons of R99, which appears to be exceeded by quite a bit.

We do not have total consumption numbers for 2024 yet, but we do know thanks to the US Energy Information Agency, that imported R99 from Neste Singapore by itself through October was roughly 62 million gallons rounding up. The Oregon Clean Fuels Forecast expects 199.5 million gallons of renewable diesel in 2025. As the program ramps up with this expectation, the imports of previous years will be far less competitive without subsidies. This means the price of renewable diesel will be higher, unless US production scales to not only fill this market void but also add tens of millions of gallons into the state.

Of that 133.3 million gallons of R99 used in 2023 in Oregon, a third, more than 40 million gallons of it was imported Neste Renewable Diesel. 973,000 barrels of renewable diesel was shipped from Singapore to Oregon that year. Other renewable diesel refiners such as Diamond Green, HF Sinclair, Marathon, Montana Renewables, Phillips 66 and Chevron also had R99 product sold into Oregon. Regardless of the expansion of US domestic Renewable Diesel production in recent years, the Neste product no longer receiving subsidies will have a real impact to maintain these 133+ million gallons of R99 inside Oregon.

This same projection reports that Oregon’s B99 Biodiesel use inside the state in 2023 was 78.8 million gallons. With a projection of Biodiesel to rise 83.8 million gallons in 2025. Given these market needs, Star Oilco predicts R99 to be expensive compared to petroleum diesel. Biodiesel will be more competitive given the available product and no substantial change in suppliers. Biodiesel will also need to be used to replace R99 gallons under the CO2 reduction programs of Oregon. Due to these market forces Star Oilco has contracts for supply at reasonable prices for our existing customers.

R99 is mandated in certain diesel uses in California by the California Air Resource Board (CARB) which make for an inelastic price. Diesel equipment operators in California will have to buy R99 at any price. This will raise the prices we in Oregon can expect to see renewable diesel at. The other low CO2 diesel fuel biodiesel will not be impacted by CARB the same way and we can expect to see B20 become more widely sold because of its more competitive price.

Biodiesel has a much more widely used market development around the US, especially in over-the-road trucking. The plants that make biodiesel also tend to be co-located, owned in collaboration with feedstock producers, and integrated within the Soy industry that produces the feedstock. Expect that biodiesel will continue to be more competitive with diesel than renewable diesel if price is the concern.

It is worth mentioning that the CARB mandates for R99 use in California will have impact to set the price for renewable diesel in other states. If the market demand mandated by CARB continues and the market is short, the price can be expected to rise to meet this demand. So unsubsidized imported R99 will likely continue to flow into California and other states but it will be at a full cost to make up the subsidy. This will likely mean that incremental gallons of R99 needed to meet the market growth projected in Oregon will be at a premium over Oregon diesel to match California’s diesel market.

US BLENDERS TAX CREDIT EXPIRATION IMPACTING OREGON

The biggest unknown on how expensive diesel will be for Oregonians relates to Federal biofuel policy. For the last twenty years the US Government has had an on-again/off-again subsidy on biodiesel and more recently renewable diesel. There have been years the subsidy was not renewed which informs us of what probably will happen with prices on biodiesel. Renewable diesel though is a stickier market. The reaction of R99 renewable diesel prices in California, Washington and Oregon market is the big question and it comes down to an issue of production. Two big issues at play are how much renewable diesel will these states continue to see from Neste’s Singapore plant and how much new US production for renewable diesel comes online to feed the market need.

The Blenders Tax Credit will be replaced with the Producers Tax Credit

The Blenders Tax Credit expired December 31st. There are those that hope that in January the new Congress will take up an extension of this but most experts in the industry do not expect and are not betting an extension will not occur. Meanwhile there is subsidy regime named the “Clean Fuels Production Credit” or the slang term preferred by industry the Producers Tax Credit (PTC) which ranges from $.20 a gallon to $.80 a gallon depending on how low CO2 the fuel as well as some labor practices. The PTC also bars imported renewable diesel and biodiesels from getting any money at import. Approximately more than 40,000,000 gallons a month of renewable diesel flows from Neste Singapore to the west coast, this will have a huge impact on Oregon. For those accustomed to that fuel at the same price as fossil fuel diesel, the expiration of this subsidy will raise our prices for those demanding R99 renewable diesel which was already in short supply prior to this change.

There is also another wrinkle in the subsidy policy of the US with this. The subsidy on Sustainable Aviation Fuel (SAF), basically renewable diesel meeting the Jet A fuel specification, is still in place for imported product for another year. Europe also has some significant incentives and mandates for SAF. Renewable diesel refiners, both domestic as well as foreign have a huge financial incentive to make renewable jet fuel over renewable diesel. This reality probably means that if a gallon of fuel can go to a jet fuel market over a transportation market it will.

So the market forces for renewable diesel in particular probably means less R99 available nationwide in the US. While that is happening, the state of California has mandated that all off road equipment run R99 Renewable Diesel. So regardless of what the price of this fuel is, California will have to use it in huge volumes. Markets being what they are, for high volume fleets demanding R99 they can expect the R99 price in Oregon will track the price paid in California. There will be exceptions of contract relationships for supply of R99 as well as retail brands moving renewable diesel blends to meet their strategic CPP requirements. This will definitely mean anyone wanting R99 will want to line up a contractual supply agreement or can expect a higher price than in 2024.

THE FEDERAL RFS AND RINS

It should also be mentioned that the US EPA has a Renewable Fuel Standard of its own. It is a completely different regulatory system compared to the Portland RFS. This program requires gasoline refiners as well as importers to use so much biofuel in their sales inside the United States. Federally refiners and importers must prove they blended specifically assigned amounts of ethanol, and biomass based diesel fuels.

This program attaches a Renewable Industry Number (RIN) on every gallon of biofuel sold in the US. As there are many unobligated users of this biofuel in the US those blending their own biodiesel, renewable diesel and ethanol generate RINs that can be sold to the refiners and importers of gasoline inside the US.

The RIN value has been low compared to historic values for biomass based diesels. As Biodiesel and Renewable Diesel generate the same type of RIN, the reduction in imported R99 might raise the value of these RINs. This value increase for the Renewable Industry Number is expected to slightly off set the hard subsidy. It will be a market based value so it can not be relied upon for lowering the cost of biofuels, but can be expected to help with price.

As more US produced renewable diesel is coming online, hopefully enough to replace the lost imported gallons before the busy summer diesel season, these RIN values may not have a major contribution to the wholesale price of R99.

CONCLUSION

We predict diesel prices to rise in Oregon compared to the US in the first quarter of 2025

Star Oilco’s team saw these market conditions coming during the summer of 2024. We have locked in contractual supply of R99 renewable diesel for our existing customers and have additional supply for customers seeking R99 renewable diesel by Star Oilco owned cardlock sites, mobile onsite fueling or smaller volume bulk delivery.

Star Oilco expects a Cap at the Rack price from the Oregon CPP to be between $.10 and $.40 a gallon by the end of January depending on biofuel supply. With unofficial conversational predictions with several large fossil fuel refiners and brokers, there is an expectation of over $.25 a gallon as a Cap at the Rack price. We think it will be higher than that with the removal of millions of gallons of R99 from Oregon’s market. In the first quarter with the removal of imported R99 hitting the state we expect the Cap at the Rack price to start in the higher $.30 a gallon range where it left off when the program was ended by a court. As the low CO2 exempt renewable diesel gallons shrink in the first quarter a heavier reliance on fossil diesel will be required.

We expect quite a bit of biodiesel to be loaded up ahead of the $1 a gallon subsidy being ended on December 31st. Renewable diesel will be in short supply due to disruptions in supply of imported product. So first quarter R99 will be at a premium and B99 for blending with diesel will be a deal to be had as fossil fuel diesel prices rise. Expect to see far more B10 and B20 offered in the market place as either a more common than not fuel at retail gas stations, truck stops, and most cardlock stations, especially in Portland. Star Oilco will have options for our customers of either B20, R99, or R20 blends of diesel all complying with the City of Portland Renewable Fuel Standard inside the city. Star Oilco’s Portland CFN and Pacific Pride locations will have both R99 and B20 hoses available for customers.

California will continue to demand any and all R99. If the market is short R99 because of a removal of imported renewable diesel, the value of R99 in California will rise to justify foreign R99 to enter the market without a subsidy. Star Oilco presumes that number will be between $.40 to $.80 a gallon. If R99 in California is able to demand a premium, Oregon will have to pay that price for incremental gallons. Oregon has a specific need for R99 and B99 for retail gasoline sellers to meet the Climate Protection Program (if you sell so much gasoline you must reduce your market share someplace and R99 diesel is the easiest way to do that). Oregon retailers will be seeking to move a budgeted amount of renewable diesel and biodiesel to meet their fossil fuel allowance budgets under the CPP. Each gallon beyond that will have to compete with California at a high price.

R99 will still be available but we expect incremental gallons to be at a premium. Contractual gallons direct with a refiner of renewable diesel will have a consistent price that a business can manage fuel surcharges against diesel. Outside of a contract for volumes, the wholesale rack price of R99 may vary wildly compared to a B5 ULSD fossil fuel diesel prices depending on how high diesel is going for are as well as the CPP and CFP values of a Carbon Credit and Cap at the Rack.

The big unknown to price is how one key importer of R99 will respond to the market without a subsidy. It is the assumption of Star Oilco that California will continue to buy imported R99 without a subsidy for it’s off-road mandated market. If the economics of Neste are such, they can compete and open the floodgates of R99 and this could change. This open flood of product is not expected especially given the economics of Sustainable Aviation Fuel which renewable diesel plants are expected to make more of in 2025.

The Oregon and Washington market will see a flow of new capacity of R99 for retailers mandated to reduce their fossil fuel volumes. US production of R99 is expected to more than compensate by 2026, but 2025 will be a chasm to jump. Chevron, HF Sinclair, Marathon, and Phillips 66 will be procuring and supplying US made biomass based diesel to the Pacific NW for their retail gas station needs. We would expect to see R99 or blends of it sold at parity with branded diesel in the retail market in Oregon.

Commercial sellers of wholesale unbranded diesel will have a tougher time lining up R99 at a price in line with wholesale B5 or B20 ULSD. No doubt with these higher prices we will be seeing an evolution of R20 (20% renewable diesel) as well as blends of biodiesel with renewable diesel available inside the City of Portland for it’s Renewable Fuel Standard as a premium fuel at a competitive price with diesel.

Star Oilco has R99 and R20 blends for commercial customers in the Portland, Oregon area. We also have R99 available for Clark County Washington commercial and municipal fleets. Star Oilco also has biodiesel blends and can support fleets seeking to succeed with it. Call us if you would like to talk about your fuel supply in 2025.

If your fleet has an interest in a consistent and contractual supply of R99 renewable diesel or wants to develop a relationship that prioritizes a 20% of renewable diesel blended to meet Portland’s Renewable Fuel Standard compliance please feel free to reach out to Star Oilco.

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For further reading of news coverage of the Oregon Climate Protection Program please see the following:

KGW8 – Climate Protection Program returns after being struck down by court

KATU2 – Oregon adopts Climate Protection Program to cut fossil fuel pollution by 90% by 2050

Oregon Capital Chronicle – Redo of Oregon program to cap greenhouse gas pollution ready for public review.

The Oregonian – Oregon restores signature Climate Protection Program to cut greenhouse gases.

Central Oregon Daily News – Oregon commission approves redo of landmark climate program after lawsuit derailed it

Oregon Public Broadcasting – Oregon to reinstate ambitious climate program amid divided reactions from industries, environmentalists

US Energy Information Agency: Biofuels Displacing Petroleum on the West Coast

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July 23, 2024

The Future of Diesel Fuel https://staroilco.net/wp-content/uploads/2024/06/Untitled-design-45.png 940 788 Star Oilco Star Oilco //staroilco.net/wp-content/uploads/2022/10/StarOilco-Logo-RGB-C-Lg-Simple.png July 23, 2024 August 23, 2024

The Future of Diesel Fuel

Retail Diesel Dispenser Example — Retail Diesel Pumps with a variety of blends of diesel. Biodiesel, Renewable Diesel, and Fossil Diesel blends shown in Portland, Oregon.

Diesel Fuel In Oregon and Washington

Star Oilco has been getting questions on the changes of diesel in Portland, Oregon. If you have not noticed, many diesel pumps at retail gas stations and cardlock have seen changing stickers on the face of the fuel pumps. As of July 1st, 2024 the City of Portland requires a minimum 15% biofuel content of all diesel sold. This policy is called the Portland Renewable Fuel Standard.

This has caused quite a few changes in what fuel pumps have for fuel. Diesel fuel buyers are noticing the bright yellow color of B20 biodiesel, the water clear color of Renewable Diesel or a a mix of several fuels tinting the color of their diesel. This trend is bigger than just Portland.

Today on the west coast there are a variety of product label stickers you will see on diesel pumps. These show the variety of diesel fuel specifications that are being sold to diesel vehicles today. Blends of petroleum ultra low sulfur diesel, R99 (99%) renewable diesel, and B99 (99%) Biodiesel are combined to meet the market needs of the diesel we all buy.

This change is because of a combination of pure market forces, government rules and local decisions by fuel haulers. Today’s diesel not only has a commodity market for the fuel it also has a market for CO2 credit value and a cap of total petroleum diesel fuel that can be sold into a west coast state with a “Cap and Invest” program requiring blends of low CO2 biofuels, the liquid fuels sold for vehicles.

Add on top of these market forces, advances in technology used to make the liquid diesel fuel. The diesel arriving at truck stops, gas stations, cardlock or out of a hose from a bulk truck has been changing and it’s often in good ways. Knowing how can be helpful in navigating why diesel may cost one price or another and may have a need or maintenance that another fuel does not.

THE RISE OF RENEWABLE DIESEL

Renewable diesel is a synthetic diesel fuel made from the same feedstock as biodiesel, but the finished product is hydrocarbon diesel. Though it is a biofuel, it is also diesel. For fuel regulation they refer to it (as well as biodiesel) as “Biomass Based Diesel” for labeling at the fuel pump.

There have been billions of plant capacity brought online for renewable diesel. During the COVID collapse of fuel prices a number of petroleum refineries shut down, then upgraded their technology to make hydrocarbon diesel fuels out of the very biobased fats, oils, and greases biodiesel is made from. These refineries use hydrotreating technology just like they do with a crude petroleum to make an actual hydrocarbon diesel molecule. With this technology adoption to make diesel and jet fuels from vegetable oils and animal fats billions of gallons of low CO2 diesel fuels are coming on the market and governments are requiring it’s use, such as Portland’s Renewable Fuel Standard.

Renewable Diesel Consumption it the US Source: Alternative Fuels Data Center

THE AVAILABILITY OF BIODIESEL

The US makes billions of gallons of biodiesel. A fuel that’s quality and performance continues to improve. If you are not a fan of biodiesel in your fuel thinking strategically about the fuel will likely benefit your fleet operation. The big concern with diesel fuel in a ultra low sulfur world is water and dirt suspended in the fuel affecting the performance of diesel emission systems. With clean and drier quality specifications of B99 blend stocks today versus a decade ago the use of this fuel has grown substantially especially in the truck stop market.

When crude petroleum prices are high and therefore refined diesel prices are equally as high biodiesel is often an extremely competitive fuel. If a large seller of diesel (including petroleum refiners) can pick up pennies per gallons on millions of gallons sold they will do so. Therefore Biodiesel is often seen in diesel in small blends even if you do not see a label on retail pump. For blends above 5% a label is required for retail fuel sales. RTHWEST?

R99 Renewable Diesel fuel dispenser label

Biodiesel Blend Percentage label for retail diesel dispenser

Above are a variety of labels used to denote what fuel blend is coming out of a retail diesel dispenser. Feel free to call Star Oilco at 503-283-1256 if this confuses you and you want it explained. We would be glad to do so.

These labels can be found together often at one pump. All state and Federal standards require ultra low sulfur diesel for any on-road diesel sale. The Federal standards also adopted by the states require a disclosure at the fuel pump if a blend is above 5% biodiesel. The max allowable blend of biodiesel for diesel truck manufactures is a 20% blend. If a truck dealership says that you cannot blend biodiesel up to 20% they need to take that up with the Federal Government because they need to support it. This is why the label shows a blend may contain between 5% and 20% biodiesel content.

Renewable diesel is a hydrocarbon diesel.

It is diesel meeting the ASTM D975 specification for diesel.

Retailers selling blends of R99 in their fuel do not need to label it given this. They still do label it given the benefits of the fuel’s performance and that customers are seeking that fuel.

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Many retail places will have stacked labels showing they may be blending 5% to 20% biodiesel as well as may be adding R99 Renewable Diesel to the fuel as market conditions dictate it is the more cost competitive fuel. When seeing a label like this it can usually be assumed they are blending a R80 (80% Renewable Diesel) and a B20 (20% Biodiesel) blend of fuel. This blend is actually believed by some to be a higher performing fuel seeing better performance that a R99 or B20 fossil fuel blend.

Fossil fuel diesels are being replaced or blended with biomass based diesels. Be it Renewable Diesel or Biodiesel. These blends are driven by more than one industry requirements, government rules, or other market forces. One of these being Portland’s banned on petroleum diesel through the Renewable Fuel Standard (RFS). This is resulting in an increase of low-carbon biofuel blends that will ultimately move to a mix of 99% renewable fuel requirement by 2030.

Renewable Diesel and Biodiesel Blend fuel dispenser label.

The big drivers are industry specification for fuels (both labeling as well as chemical characteristics), state rules on selling these fuels, their quality assurance as well as CO2 content, and of course the market forces. Market forces being the supply and demand availability of fuel needed to meet customers. Less fuel available to sell means higher prices for customers.

A decade ago the market for diesel was far simpler. Though you had biofuels and some blend mandates basically you had a diesel specification accepted and the daily price as tracked by a lighted retailers sign, a wholesale market average or spot buying by some customers. Today this market is far more complicated by government regulation on the west coast. There are three big programs at state levels impacting this.

State Fuel Rules cause a unique need for one state or another. Whereas twenty years ago if Oregon or Washington fuel was selling for more than the Gulf Coast you might see brokers bring fuel into the region then driving down high prices. With the creation of various complex and unique rules on diesel, imports of fuel to these low CO2 fuel states has dropped. The amount of people moving product into west coast states has dropped. The big rules causing this are the Cap and Invest programs of the West Coast states, the Low CO2 Fuel Standards of the states, and the fuel blend mandates of various jurisdictions of these states. For instance California now requires all off-road diesels but 99% renewable diesel. Portland, Oregon also has a CO2 requirement and minimum 15% blend of biomass based diesel on all fuel sold in the state.

WHAT ARE THE DIESEL FUELS AND THEIR SPECIFICATIONS

Petroleum Diesel:
ASTM D975 Specification.

The ASTM D975 is a series of tests used to maintain consistent industry standard product performance for diesel fuel. It includes among several tests cloud point, cold filter plug point (CFPP), several masurements of diesel fuel operability performance, intrained water content, sediment, carbon residue, ash, distillation, viscosity, sulfur, copper corrosion, cetane number, cetane index, aromaticity, and conductivity.

Renewable Diesel:
ASTM D975 Specification.

Renewable Diesel is following the same series of tests as petroleum refined diesel fuels. It is the same ASTM D975 specification. Though Renewable Diesel has some different properties that exceed the ASTM specification of diesel. Renewable Diesel is highly prized as a fuel because it typically is a cleaner and drier diesel fuel than petroleum diesel. This being seen by the tests on sediment and water content in a parts per million level. Renewable Diesel content in diesel fuel can also be tested for looking for a C14 molecule (the chain typically created in a Hydrotreated Diesel process from fats, oils and greases.

Biodiesel (Methyl Esther):
ASTM D6751 Specification.

The ASTM for Biodiesel tests a mono-alkyl esters of long chain fatty acids derived from vegetable oils and animal fats. The testing for quality assurance covers an analysis for flash point, methanol, water and sediment, kinematic viscosity, sulfated ash, oxidation stability, sulfur, copper strip corrosion, cetane number, cloud point, acid number, carbon residue, total and free glycerin, phosphorus, reduce pressure distillation temperature, atmospheric equivalent temperature, combined calcium and magnesium, and combined sodium and magnesium.

For more on Biodiesel Use and Handling the National Renewable Energy Laboratory has a great book on the subject.

THE HISTORY OF DIESEL FUEL SPECIFICATIONS IN THE UNITED STATES

In the 1990’s the US EPA passed rules that demanded a phase out of sulfur in diesel fuel. The presence of sulfur was very good for the fuel’s storage stability as well as fuel lubricity, but was horrible for air quality. Additionally the big smog contributor was NOx (nitrous oxide) which was one of the EPA’s reason’s for pulling sulfur out of diesel. For the EPA to get engine manufacturers to treat the NOx emissions at the tailpipe they needed all the sulfur gone (ultra low sulfur diesel) for modern diesel emission systems to be able to eliminate NOx as well as a host of other pollutants including particulates.

The story of changing diesel fuel standards in the US under the EPA is one of removing sulfur from our diesel fuel. In 1996 the fuel refiners and sellers of diesel had to move the sulfur content of the fuel sold for on-road purposes to below a 500 parts per million standard. Commonly referred to as Low Sulfur Diesel fuel. In 2006 the standard moved to a maximum of 15 parts per million of sulfur for all on road fuels.

In 2006 while the sulfur content of fuel was dropping the City of Portland released the first mandated blend of biodiesel content. This being a 5% biodiesel blend. The next year, the State of Oregon followed with its own Renewable Fuel Standard requiring this throughout the state. This began the expectation of biodiesel in most diesel fuel in the Portland, Oregon area. Washington also passed a similar policy for blending biodiesel but the enforcement and need for the fuel is less specific at Washington fuel pumps.

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July 13, 2024

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What Is The Renewable Fuel Standard In Portland?

Did you hear about the time Portland banned fossil fuel diesel?

Portland is making a big move to provide cleaner air and reduce greenhouse gas emissions. Portland has implemented what’s called the Renewable Fuel Standard (RFS) beginning its first phase on May 15th, 2024. The RFS policy in Portland mandates that there has to be an increase of use of low-carbon biofuels in diesel within city limits of Portland. This is part of the ultimate Climate Emergency plan. This RFS mandate was first implemented in 2006 as a B5 (5%) Biodiesel blend mandate with the goal of mandating a 20% blend. The RFS is the first of its kind not only in Oregon but in the entire United States. Portland’s reputation as a leader in environmental sustainability efforts continues.

Portland’s Phases To Implement Almost 100% Renewable Diesel

What makes Portland’s mandate unique is the requirement that the biofuels have a CO2 value so low it bars most American made biodiesels. The blending requirement starts at 15% in 2024, and then it will steadily increase to 50% by 2026 and will reach 99% by 2030. This schedule demonstrates how Portland’s low-carbon ambition is present to transition away from fossil fuels and promote alternative energy sources.

This policy is expected to reduce air pollution and carbon emissions. It will also create new markets for biofuels, which will lead to increased economic opportunities. This will ultimately help the city become a more sustainable and environmentally friendly place to live as Portland has taken the lead in striving for sustainability over the years.

The policy will also help create jobs in the biofuel industry and provide opportunities for businesses to switch to renewable energy sources. It will also help reduce the city’s dependence on fossil fuels and protect the environment for future generations.

Want to learn more about meeting Portland’s requirements for the Renewable Fuel Standard mandate?

Multnomah-Falls-portland-oregon-star-oilco-fuel-delivery

Focus on Lower-Emission Biofuels

Uniquely, Portland’s RFS goes beyond just the biofuel blend. It also sets a strict carbon intensity (CI) standard for the biofuels themselves. This ensures the biodiesels used have a significantly lower carbon footprint compared to traditional options. Biodiesels produced domestically often fall short of this CI requirement, prompting many suppliers to look to renewable diesel sources. This focus on biofuels with a lower lifecycle carbon footprint makes Portland’s RFS even more impactful in reducing greenhouse gas emissions.

Exemptions and Implementation Details

The initial phase of the RFS targets on-road diesel sales. This applies to diesel purchased at gas stations, by mobile fueling companies, and for use in large stationary tanks. However, the long-term goal includes all diesel use within the city. Some temporary exemptions apply to off-road diesel uses such as heating oil, generator fuel, aircraft fuels, watercraft fuels, and other dyed fuel users. One local truck stop, Jubitz Truckstop, was granted a temporary exemption. This is likely due to concerns about disrupting critical transportation operations. Daimler (the manufacturer of Freightliner and Western Star trucks) has a research facility in Portland. Daimler was also granted an exemption to meet their specific fuel needs for testing purposes.

The RFS enforces compliance through fuel sampling and requires documentation proving the fuel meets the minimum biofuel content and CI standards. Businesses that purchase diesel need to be able to show their compliance through bills of lading (BOLs) or similar records from their fuel provider, like Star Oilco. If a business does not comply and provide this documentation, it can result in pretty hefty fines. First offenses can be a fine of $10,000 per day. Repeat offenders will end up facing even bigger penalties of up to $15,000 per day. These fines can really show the impact of how serious Portland is taking this initiative.

Impact on Businesses and Consumers

While residential consumers who don’t purchase diesel directly are not directly impacted, businesses purchasing diesel, especially in bulk, will need to adapt to the new regulations. This may involve acquiring documentation from fuel suppliers or entering into contracts guaranteeing compliant fuel blends. Wholesale fuel distributors, who sometimes purchase from multiple vendors and blend fuel mid-route, may face additional challenges in tracking the biofuel content and CI of their product. However, as the program matures, the industry is expected to adapt and streamline these compliance procedures.

Contact Us Today To Discuss What This Means For Your Business

A Step Forward for Cleaner Transportation

Portland’s ambitious RFS sets a new expectation for sustainable transportation. Promoting low-carbon biofuels allows Portland to aim to significantly reduce its reliance on fossil fuels and be able to contribute to cleaner air for its residents. The RFS program will be able to serve as a model for other cities that are looking at implementing similar initiatives. Great job Portland for paving the way to a sustainable future for other cities! Although challenges will remain, as businesses adapt to this new norm, Portland’s RFS represents a significant step forward in creating a more sustainable transportation sector.

The RFS program is an important step in the fight towards sustainability and lower carbon fuels. It sends a clear message that cities are willing to take action to reduce emissions and protect the environment. We anticipate that other cities will follow Portland’s lead and create similar initiatives. This will have a significant impact in reducing emissions and helping to protect the environment.

It is a positive step towards a more sustainable future. Alternative fuels have become more and more readily available. Investing in alternative fuels and reducing carbon emissions is essential for protecting the planet for future generations. Governments should prioritize investing in renewable energy sources and incentivize communities to switch to alternative fuel solutions.

Thank you for choosing Star Oilco as your preferred fuel provider in Portland and Vancouver, Washington. Give us a call to discuss how the RFS mandate can affect your business and one of our team members would be happy to discuss this with you.

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May 31, 2024

Every Question We Have Been Asked About Renewable Diesel https://staroilco.net/wp-content/uploads/2024/02/3-star-oilco-portland-or-renewable-diesel-1024x696.jpg 1024 696 Star Oilco Star Oilco //staroilco.net/wp-content/uploads/2022/10/StarOilco-Logo-RGB-C-Lg-Simple.png May 31, 2024 September 5, 2024

Every Question We Have Been Asked About Renewable Diesel

Renewable Diesel Frequently Asked Questions (FAQ)

What is renewable diesel?

Renewable diesel is a synthetic diesel fuel, known for it’s lower CO2 characteristics, typically seeing purity and real world performance response superior to petroleum diesel fuel. Renewable diesel is a next generation hydrocarbon diesel biofuel made by either the Fischer-Tropsch or Hydrogenation processes.

Hydrogenated renewable diesel is made by taking fats, oils, and greases by use of a hydro-treater. The biomass based oil or fat is cracked and reformed in the presence of hydrogen and catalyst forming a hydrocarbon diesel molecule.

Fischer-Tropsch renewable diesel is used by converting any btu dense feedstock (wood waste, woody biomass, municipal garbage, coal, and an endless list of low value waste products into syngas, then converting this into a wax that is reformed into hydrocarbon diesel.

Can Renewable Diesel be used as Heating Oil?

Yes. Renewable Diesel is a synthetic hydrocarbon diesel fuel. It can be used interchangeably with petroleum diesel products of similar grade. Heating Oil is typically number 2 diesel which is the same specification as Dyed R99 Renewable Diesel (or blends of Renewable Diesel with petroleum diesel). Star Oilco now offers R99 Heating Oil delivered in the Portland metro region area of Oregon.

Most modern oil heat appliances use a Becket Burner. For more on heating fuel compatibility with oil furnaces and oil burning appliance please see “Alternative Fuels and Becket Burners” for more information.

Why do people use renewable diesel over petroleum diesel?

Fleet managers operating R99 Renewable Diesel report a lower mechanical cost of operation using the fuel. Beyond the immediate benefit of R99 cutting CO2 emissions by half or more, fleets experience performance benefits from the fuel. The big savings are seen the the performance of Tier 4 Emission systems on modern diesel seeing far less wear of the Diesel Particulate Filter system as well as far fewer regenerations of the system. Additionally Renewable Diesel is a very clean and dry diesel fuel improving the storage stability, field operation, and general predictability of the fuel’s performance.

How do I know Renewable Diesel is being sold at a retail location?

Renewable Diesel is a hydrocarbon diesel that meets the specification for petroleum diesel known as ASTM D975 specification. This means currently R99 can be readily blended and sold with petroleum diesel without a disclosure. The US Federal Trade Commission and local state Weights and Measures have rules for retail pump labeling. Blend percentages of biomass based diesel must be labeled especially if being advertised. As R99 Renewable Diesel has a higher value and is sought out by many consumers though usually it is disclosed. The pump labeling for R99 Renewable Diesel typically looks like the below.

What is renewable diesel made of?

Renewable diesel can be made from a host of things, usually a low value waste product. The most common feedstock used currently is waste vegetable oil, wastes from animal rendering, and other biologically derived oils. Processes using bio-oils are following a Hydrogenation process to turn low value waste oils into high value diesel and jet fuel.

Chevron Renewable Energy Group and Diamond Green Diesel (Diamond Green is in a joint venture with Valero) are the largest producer of renewable diesel with their REG Ultra Clean Diesel product in the United States. Neste is the largest producer of renewable diesel internationally, with its “Neste My” product. being the two largest producers of low CO2 bio-oil derived renewable diesel fuels.

Major petroleum refiners have also turned around existing petroleum refineries into Renewable Diesel Refineries to produce this in demand low CO2 fuel. HF Sinclair , Marathon, Phillips 66, and Montana Renewables. There are quite a few newer Renewable Diesel projects planned and in progress around the United States as well as in the Pacific Northwest.

Other refiners of renewable diesel (on a much smaller scale of production) are using a Fischer-Tropsch process with wood waste, sorted higher grade municipal garbage, and other high btu value carbon based waste products. Many expect this to technology to be the future of all diesel and jet fuel refining turning refuse into fungible low carbon fuel.

What is renewable hydrocarbon diesel?

Renewable hydrocarbon diesel is a synthetic diesel fuel made from non-petroleum feedstocks like vegetable oil, animal fats, municipal waste, agricultural biomass, and woody biomass. It is characterized by having a low CO2 and renewable resource for its feedstock and is made without crude petroleum, coal, or natural gas as a direct feedstock input in the refining process.

How do they make renewable diesel?

Renewable diesel is made by several processes. If you are buying renewable diesel, it is probably from a Hydrogenation process used by Renewable Energy Group and Neste for their products. Other smaller volume producers are using a Fischer-Tropsch process or Fast Pyrolysis. Both processes involve taking energy dense molecules, cracking those molecules under heat and pressure, then reforming them in the presence of a catalyst and added hydrogen, which forms a renewable diesel molecule.

Is renewable diesel a lower carbon fuel compared to petroleum diesel?

Yes, to this point all renewable diesel made from renewable feedstocks have appeared to be a lower CO2 fuel compared to petroleum diesels. The California Air Research Board in particular has done research on this in depth.

The low CO2 lifecycle emissions of Renewable Diesel also is tracked closely and supervised by California’s Low Carbon Fuel Standard, Washington’s Low Carbon Fuel Standard, and Oregon’s Clean Fuels Program. The highest value markets for low CO2 fuels in the United States are California and Oregon, which both have mechanisms that track and price the CO2 intensity of diesel fuels as well as the sustainable lower CO2 substitutes and blend-stocks that can go in those diesels. They track, rate, and determine the carbon intensity of the fuels providing a neutral and scientifically defensible number for CO2 reduction.

Is renewable diesel available in Oregon?

Renewable diesel is readily available for delivery from Star Oilco throughout the Pacific Northwest via 10,000 gallon volumes of bulk delivery. Star Oilco is also offering bulk delivery of any size and mobile onsite fueling service within 100 miles of the Portland, Oregon market.

Star Oilco has R99 Renewable Diesel available with a Star Oilco CFN Cardlock card in Portland, Oregon.

What is the difference between biodiesel and renewable diesel?

Biodiesel and renewable diesel are very different fuels made with very different processes. In a nutshell, biodiesel is made with a simple chemical reaction that turns vegetable and animal fats into fuel. Renewable diesel is made from far more complicated process where vegetable and animal fats (as well as other feedstocks) are cracked on a molecular level and built back into synthetic diesel fuel.

What is the difference between renewable diesel and Sustainable Aviation Fuel?

The difference between the fuels is the specific gravity and general specification for what the fuel is used for. Jet fuel, or Sustainable Aviation Fuel, and on-road diesel fuel are different fuels and therefore have different specifications. Renewable diesel is typically referring to a #2 diesel specification for on road diesel use.

Sustainable Aviation Fuel or “SAF” is typically referring to “Jet A” or “JP8” jet fuel specification for fuel. This is a #1 diesel range fuel with use and handling requirements that are far more stringent than for on-road or off-road diesel fuels. Renewable jet fuel can be used as a kerosene or #1 diesel fuel but renewable diesel cannot be used as a jet fuel.

Where do I buy renewable diesel in Oregon or Washington?

Renewable Diesel is currently available for bulk delivery and mobile onsite fueling. It will soon be offered at commercial cardlock in the Portland area. It is being sold as R99 and as Ultra Clean Diesel, which is a mixture of biodiesel, renewable diesel, and petroleum diesel.

What is R99?

R99 stands for 99% renewable diesel and 1% petroleum diesel. Federal rules over alternative diesel fuels made fuels requires that manufacturers of non-petroleum derived diesel fuels must blend a minimum 1% petroleum with the fuel to generate a Renewable Industry Number or “RIN” under the US Federal Renewable Fuel Standard. Additionally there are other incentives that require a “blender of record” to receive these tax credits.

Is renewable diesel being made in Oregon?

As of Spring 2022, renewable diesel is not being manufactured in Oregon. There is a major projects underway, Next Renewable Fuels in Port Westward, Oregon.

What is renewable diesel made from?

Renewable diesel can be made from many energy dense carbon based material. By volume of produced product sold in the United States, vegetable oils and animal fat-based wastes are the most common feedstock. Woody biomass, agricultural wastes, and sorted municipal wastes are also sources for renewable diesel production.

Is renewable diesel made from palm oil?

Palm oil can be used as a feedstock for renewable diesel. There are producers who use palm oil as a feedstock. In the United States, feedstocks and carbon intensity are tracked closely under both Oregon and California’s fuel programs. You can determine if a supplier is using palm oil as a feedstock through these regulated pathways.

How much does renewable diesel cost?

This is a tough question to answer given there are several markets intersecting. From the feedstocks to the market demand for the finished product as well as both California and Oregon’s Clean Fuel Standards which place a price on the CO2 intensity of the fuel which reduces the cost of the fuel if consumed in Oregon and California.

It has consistently been trending between the same cost and over $1 a gallon higher than petroleum diesel depending on the state, you buy renewable diesel in. In California, renewable diesel is very close to petroleum diesel depending on the value of CO2 credits for lower-carbon fuels. In Oregon, it has consistently been between $.05 to $.80 a gallon higher than diesel also depending on the value of CO2 abatement associated with the fuel and what these carbon credits are trading for.

When petroleum diesel costs are high Renewable Diesel tends to be more competitive with petroleum diesel. When petroleum diesel is below $3 a gallon the cost of Renewable Diesel by comparison is usually higher unless CO2 credits are in higher than normal demand for Clean Fuels Program demands.

Can you mix petroleum diesel and renewable diesel?

Yes. Renewable diesel and petroleum diesel can be blended in any mixture without worry. They are drop-in substitutes for each other in your fleet’s use. Renewable Diesel is a drop-in fuel. It is a hydrocarbon diesel that will work mixed with diesel or biodiesel blends of petroleum diesel.

Learn more about renewable diesel and how it can benefit your operations. Contact us today.

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Bio-diesel and Feed-stock samples at REG

October 8, 2018

What Types of Feedstock Can Be Used To Make Biodiesel? https://staroilco.net/wp-content/uploads/2018/10/Biofuels-and-Feedstock-e1538415688117-700x525.jpg 700 525 Star Oilco Star Oilco //staroilco.net/wp-content/uploads/2022/10/StarOilco-Logo-RGB-C-Lg-Simple.png October 8, 2018 September 12, 2024

What Types of Feedstock Can Be Used To Make Biodiesel?

To answer what feedstocks can be used to make biodiesel we need to first answer – What is Biodiesel?

Biodiesel is created through a process called transesterification. Transecterification is when an alcohol such as methanol or ethanol is added to an oil or fat. This creates methyl esters and glycerin. Methyl esters is the scientific name of Biodiesel. Because biodiesel needs a fat or an oil to start with, this fuel can can be created with any number of feedstocks. If you would like to learn more about Biodiesel check out this for more questions about biodiesel.

According to the U.S. Office of Energy Efficiency & Renewable Energy:

“A feedstock is defined as any renewable, biological material that can be used directly as a fuel, or converted to another form of fuel or energy product. Biomass feedstocks are the plant and algal materials used to derive fuels like ethanol, butanol, biodiesel, and other hydrocarbon fuels. Examples of biomass feedstocks include corn starch, sugarcane juice, crop residues such as corn stover and sugarcane bagasse, purpose-grown grass crops, and woody plants. “

Renewable Energy Group (REG) performed a study in 2009 with the support of the Iowa Power Fund Board and the Iowa Office of Energy Independence that tested 36 individual feed-stocks. Star Oilco will be spotlighting these feedstocks through our blog and our social media. The full report can be found on their site if you would like to read ahead or explore the results in more depth. We hope you find these as interesting as we did!

Above photo taken at REG headquarters in Ames, Iowa.

This first blog highlights the following 2 types of feed-stock:

Babussa Oil & Beef Tallow

Babassu Oil

Babassu oil is extracted from the seeds of the babassu palm tree, Attalea speciosa, an evergreen tree growing to 30 m (98ft) by 20 m (65ft) at a slow rate. It is hardy to zone (UK) 10 and is not frost tender. The flowers are pollinated by bees and other insects. The tree is common in Brazil, Mexico, and Honduras; it grows well in areas typically cultivated for coconut or palm. The kernels contain 60-70% oil, appear transparent, and smell like walnuts. In its natural form the oil is liquid at 20-30°C (68 – 86°F). The seeds are edible and the oil is used in margarine, soaps, detergents, lamp oil and skin products. Oil extraction results in a cake containing 15-25% protein (depending on the shell content), which is a valuable feedstuff.

In February 2008, Babassu palm oil and coconut oil were blended with jet fuel to power a Virgin Atlantic Boeing 747 during a test flight from London’s Heathrow to Amsterdam.

Beef Tallow

Tallow is a rendered form of the waste fats and greases from processing beef. Rendering is a process by which lipid material is separated from meat tissue and water under heat and pressure. Beef tallow is primarily made up of triglycerides and it is solid at room temperature. The B100 that is created from this source has a very high cloud point. “Cloud point is the temperature at which wax (paraffin) begins to separate when oil chilled to a low temperature, and it serves as an important indicator of practical performance in automotive applications in low temperatures.” (Source) The other uses for tallow include animal feed, soap, cooking and in the past, candles.

Biofuel