Renewable Diesel Explained: Pricing, Policy & Market Forces

Renewable diesel is made from seed oils, corn oil, used cooking oil and animal fats by converting the feedstocks to paraffinic hydrocarbons using hydrotreating units. A lower-carbon alternative that is otherwise chemically identical to its conventional cousin, the fuel can move seamlessly in existing supply systems and engines, making it an appealing option for municipalities, suppliers and end-users alike.

California consumes the vast majority of US renewable diesel supply. Renewable diesel and biodiesel together are largely displacing conventional diesel in the state. The market is propelled by significant financial incentives provided by state-based low-carbon fuel standards, the US Renewable Fuel Standard and the US 45Z tax credit. Driven by supportive legislation, renewable diesel capacity has increased over the years and volumes have gone to highly incentivized states like California.

We are known for our robust methodology and market trusted expertise, and deliver prices that are reliable and truly reflective of underlying market conditions. Unlike other price reporting agencies, Argus’ renewable diesel price assessments cover the various modalities to ensure that market activity is captured accurately, without conflating distinct transportation modes within a single price.