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European renewable diesel to move into US market

31 May 2012, 5.09 pm GMT

Houston, 31 May (Argus) — Independent Finnish refiner Neste, the largest producer of renewable diesel in the world, has acquired the right to bring its biofuel into the US and generate high-value renewable identification numbers (RINs) upon import.

After a two-year battle to acquire permits from the US Environmental Protection Agency (EPA), Neste has received foreign RIN generator approval for its facilities in Porvoo, Finland and Singapore. Two majors have already confirmed that they are moving cargoes of recently approved renewable diesel from Europe to the US.

State-side, each USG of renewable diesel generates 1.7 biomass-based diesel, or biodiesel, RINs. At current market value, a USG imported will also create a credit that can sell for about $2.23c/USG. In the midst of crippling RIN fraud across the US, and ongoing investigations by the EPA and Federal Bureau of Investigation, the market is in desperate need of a new source of valid credits.

The Colonial pipeline currently ships so-called R5, or a blend of 5pc renewable diesel and 95pc 61-grade ultra-low sulfur diesel (ULSD), to destinations north of Mississippi. The pipeline recently withdrew a proposed change to specifications of 61-grade diesel that would split the distillate into two categories: grade 63, or “clear” ULSD that contains no renewable diesel, and grade 61 which would include the biofuel. The pipeline will propose the changes again in two to three months and has said that it remains committed to making the implementation.

In the US there is only one producer of renewable diesel. Dynamic Fuels – a joint venture between synthetic fuel producer Syntroleum and food processor Tyson Foods, which has output of nearly 5,000 b/d out of Geismar, Louisiana. Just yesterday Neste took legal action against Dynamic, claiming the facility infringed facets of its renewable diesel technology that has recently received US patent protection. Neste's US patent will expire in 2025.

Diamond Green Diesel, a joint venture between independent refiner Valero and Darling International, will produce nearly 9,000 b/d of renewable diesel beginning this December out of Norco, Louisiana.

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