Introduction
According to Maximize Market Research, the global renewable diesel market was worth USD 12.69 billion in 2023. This market is projected to grow at a CAGR of 7.6% during the forecast period of 2024 to 2030, when it is predicted to reach a value of USD 21.2 billion.
Meanwhile, Mordor Intelligence's research indicates that the global biodiesel market will be valued at USD 34.66 billion in 2024. At a CAGR of 7.7% between 2024 and 2029, the market will likely touch USD 50.22 billion.
But wait? Aren't renewable diesel and biodiesel the same thing? Why are these two market estimates so wildly different from one another?
Well, biodiesel and renewable diesel have some similarities. But they are, in fact, distinct products with different (though overlapping) applications.
Biomass-based fuels
Fuels derived from biological sources - mainly oil- and fat-bearing materials like oilseeds, animal fats, algae, etc. - have become increasingly popular in recent years. These fuels include bioethanol, biodiesel, renewable diesel, and sustainable aviation fuel, among others. Each of these green fuels has different compositions and physio-chemical properties, depending on the different production processes and feedstocks used. They also differ in terms of quality, cleanliness, and applications.
Renewable diesel plants and biodiesel plants both use organic biomass as their feedstock. They are both also used to fuel automotives. And they both offer advantages in terms of carbon renewability. Beyond these similarities, many factors set these two fuels apart.
What exactly are renewable diesel and biodiesel?
Renewable diesel is also called hydrotreated vegetable oil, or HVO. It may also be referred to as an advanced biofuel or a second-generation biofuel. It can be produced from various triglyceride and fatty acid-containing raw materials. Predominantly, however, a renewable diesel refinery will rely on feedstocks that are waste and residues, like used cooking oil (UCO), animal fats or tallow, acid oil, fatty acid distillate, or palm oil mill effluent (POME). The renewable diesel production process calls for removing impurities from the raw materials before they are used. (This helps renewable diesel refinery owners to ensure the longevity of the catalyst used and of the renewable diesel plants themselves.) The final product, the renewable diesel itself, is an odourless, colourless fuel with a chemical composition identical to that of fossil diesel.
On the other hand, biodiesel (or traditional biodiesel) is also called FAME, which is short for fatty acid methyl ester. This fuel may also be referred to as a first-generation biofuel. The origins of biodiesel can be traced back to Rudolf Diesel, the inventor of the diesel engine, who experimented with using vegetable oil to fuel his engines. Due to its high viscosity (in the range of 28-40 mm2/s), vegetable oil led to operational issues like the formation of deposits, or injector fouling, in diesel engines. Eventually, scientists came to rely on the transesterification process to reduce vegetable oil viscosity to around 4-5 mm2/s - much closer to the viscosity of petroleum-derived diesel.
How does the renewable diesel production process differ from that of biodiesel?
A hydrodeoxygenation reaction characterises the renewable diesel production process, carried out at elevated temperature and pressure conditions in the presence of a catalyst. In some cases, renewable diesel is also produced by the techniques of gasification and cracking or pyrolysis.
Biodiesel production, on the other hand, involves the transesterification of the lipid feedstock with an alcohol (like methanol or ethanol) under mild conditions, also in the presence of a base catalyst. The resultant products are glycerine and mono-alkyl esters, with the latter being what we use as biodiesel.
How is renewable diesel used?
The composition of renewable diesel simulates that of petro-diesel. This means that the two products are chemically equivalent. For this reason, renewable diesel is a drop-in fuel, i.e. it can be used in high concentrations and even as a standalone product, with no need for mixing before it is used in diesel engines. As a hydrocarbon, renewable diesel can be co-processed and seamlessly blended with petroleum diesel, transported in petroleum pipelines, and sold at retail fuel stations - both alone and when blended. With relatively small retrofits, an existing petroleum refinery can be converted into a renewable diesel refinery. Essentially, renewable diesel meets ASTM D975 specifications for petroleum diesel.
How is biodiesel used?
On the other hand is biodiesel. Though renewable and biodegradable, biodiesel cannot be used as is in diesel engines. In its unblended form, biodiesel is referred to as B100, pure biodiesel, or neat biodiesel. While using biodiesel does not need any modifications to typical diesel engines, B100 must be blended with petroleum diesel for it to do its job well. Biodiesel is mainly consumed as blends with petroleum diesel in different ratios. B2 is a blend of 2% biodiesel in petro-diesel; B5 and B20 are also standard blends. In a few situations, B100 may also be used, but that requires a differently designed vehicle with modifications to your traditional diesel engine.
Indeed, there are some limitations to biodiesel use. Unlike renewable diesel, biodiesel is only added to petroleum diesel at blending terminals. In cold weather, biodiesel performance depends on the blend, the feedstock used, and the characteristics of the petro-diesel used. Blends with smaller proportions of biodiesel work better, as some compounds in biodiesel crystallise in very low temperatures. Nonetheless, beyond reducing GHG emissions, biodiesel offers the added advantage of extending the lifespans of certain engine components due to its lubrication qualities.
The renewable diesel market: A brief overview
When segmented based on feedstock type, the renewable diesel market is dominated by the vegetable oil segment. Rapeseed oil, palm oil, and soyabean oil are some of the common vegetable oils used to make renewable diesel, mainly because they already have established supply chains and are compatible with existing infrastructure.
When segmented based on production process, the hydrotreating segment claims the largest market share. This is largely because of the maturity of the process. Having been used extensively by petroleum refineries, it is seen as a reliable process for a renewable diesel refinery to use as well.
Unsurprisingly, the commercial vehicles segment dominates in terms of application. Ease of integration into existing infrastructure is a major plus for this segment. Add to that global calls for emissions reductions.
In terms of region, North America leads the global renewable diesel market. The region's position at the forefront of the shift to renewable diesel is driven by several factors. North America has a fairly well-established infrastructure for the production, distribution, and retail sale of renewable diesel. This includes renewable diesel plants, blending terminals, and fuelling stations. Additionally, individual consumers and businesses in North America are also becoming more and more conscious of sustainability.
Biodiesel market trends
In the biodiesel market, too, the transportation sector is set to lead the way in the coming years. In large markets like the United States, individual consumers, as well as government agencies at federal, state, and local levels, use biodiesel blends like B20 for school buses, transit buses, garbage trucks, mail trucks, military vehicles, and other public services. US Department of Energy investments in sustainable biofuels have also fuelled the growth of this industry.
Nonetheless, Mordor Intelligence notes the crucial role of the Asia-Pacific market in biodiesel industry growth. Already one of the largest biodiesel consumers in the world, the region's biodiesel market is expected to grow even further. This is supported by legislation in important countries in the region. Indonesia and Malaysia have mandated the adoption of B30 and B20 blends of palm-based fuel, respectively. India, China, and Vietnam also increasingly support using biodiesel blends in transportation fuel.
As you can tell, the biodiesel and renewable diesel markets are both looking at promising upward trajectories. Investing in green fuels such as these is a good idea not only from an environmental but also an economic perspective. Let this article be the impetus you need to reach out to Kumar Metal Industries and start building the biodiesel or renewable diesel plant you've been thinking about!
