Renewable Diesel: A Love Story

“Without coal and IG Farben, I can have no foreign policy.” Gustav Stresemann, Foreign Minister of the Weimar Republic “The German nation is forced to live within a much too restricted space. Barred from owning the world’s sources of raw materials, it is forced to produce the raw materials it needs for its national security out of its own deposits-from coal, salts, lime and other substances, as well as from air and water through chemical means.” Carl Krauch, Head of R&D, IG Farben

During the march across Germany following D-Day, American forces were accompanied by a ragtag collection of “faux colonels,” corporate engineers posing as military members in a frenetic race to capture German scientists and technical equipment before the Russians did. Early members of FIAT (Field Information Industry, Technical; one of the most important US agencies deployed for “intellectual reparations”) were, according to one observer, “mainly volunteer hot-shot technical experts, dollar-a-year men on paid leave from American industry.” Lured by Germany’s renowned genius for synthetic chemistry, these “volunteers” were motivated by the prospect of looting IG Farben, one of the largest, oldest, and most influential chemical cartels in the world. “They knew exactly what they were looking for and usually found it,” commented one Czech-Jewish engineering student and US Army sergeant. “For instance, they turned up new methods for making synthetic rubies, or synthetic gasoline, or synthetic rubber. Once one of those industrial hot-shot investigators had found the novel method he was looking for, he took it back Stateside, to have it put into production at savings of millions of bucks in development costs.” One year in, after wising up to the ulterior motives of its volunteer troops, Washington hired a new crew of “people’s own” investigators — “a young Austrian-Jewish refugee; a middle-aged, scientifically and linguistically unqualified Good-Time Charlie from North Dakota; and an elderly, taciturn Austro-Jewish couple from New York with vague scientific credentials” — who were instructed to “work for the nation, and not for the moneybags at Dupont, Firestone, and Upjohn.” Less targeted in their recovery methods, the crew adopted a vacuum-style approach, amassing some 175 tons of research. What did Washington hope to find among the 2,500 trunks of documents lugged home? Among other industrial treasures (rockets, war chemicals, wind tunnels, etc.), it sought the Holy Grail of energy security: a renewable, drop-in fuel — one that billions of combustion engines could use without modifications or entirely new engines — to replace oil. Painfully aware of its petroleum deficit from World War I, Germany was the first country to buckle down on synthetic fuel production, producing a cache of Nobel-prize winning chemists devoted to the enterprise. Seventy-five years and three generations of biofuels later, we’re still chasing the Holy Grail. This week, as we face yet another anxiety attack surrounding oil, we discuss the century-long hunt for a renewable, drop-in fuel: an elusive prize, now just beyond commercial reach, that continues to tantalize both government and industry alike.


Biofuels: The First Generations

The history of biofuels is marked by incremental environmental improvements. After Good-Time Charlie returned home with his booty, Michael Straus, assistant secretary of the interior, boasted that the German records had “brought a synthetic fuels industry within the nation’s reach. This will make the United States ready for a declaration of oil independence at any time that our dwindling domestic natural petroleum reserves make it necessary to return to synthetics. That time,” he added ominously, “may be sooner than we think.” However, a flood of cheap foreign oil soon entered the market, and big oil companies cancelled their own synfuel experiments while attacking any legislative initiatives that might promote them. The project was shelved for the next twenty-five years and did not become a national concern again until the oil crisis of the 70s. It wasn’t until President George W. Bush became “obsessed” with energy sovereignty after the Iraq War that traditional biofuels finally entered the scene. First generation biofuels are made from food crops. Corn, soybeans, and oil palm crops are the usual inputs (thanks to their higher energy density), naturally pitting them against environmental groups concerned at the change in land use and those in the food and feed businesses. Corn ethanol may be the most notorious of the early biofuels: it has a terrible EROI (energy return on investment) and, by some estimates, costs us 70% more energy to produce than it returns. “Ethanol is throwing good energy after bad,” concludes energy analyst Alice Friedemann in her latest energy tome, Life After Fossil Fuels: A Reality Check on Alternative Energy. “At least when we fall off the energy cliff, it will be one hell of a party. Ethanol is 100% pure alcohol.” Next, we moved onto waste streams. “Ever notice a car going down your street and smell French fries?” writes Friedemann. “Your nose is not lying. That vehicle is burning biodiesel from reclaimed cooking oil.” Second-generation biofuels convert agricultural waste products — animal fat, Used Cooking Oil, sawdust, etc. — into fuel. They have the instant advantage of “dual cropping for calories,” since corn ears go to pigs and humans, while stalks and leaves go to fuel.

Once upon a time, restaurants had to pay recycling companies to lug away their grease buckets. No more: today, used cooking oil is regarded as the new “liquid gold,” and prices rose more than 80% in 2021. Thanks to a growing black market for spent supplies, some grease thieves can expect to rake in $1,500 a day. “It’s more lucrative than crack,” remarked one UCO collector.

The fuel also runs cleaner, releases less toxins into the atmosphere, and has a smaller carbon footprint than traditional diesel. Some of its earliest proponents — including Willie Nelson, Sheryl Crow, and John Deere — were attracted to its environmental benefits combined with the prospect of mitigating global warming and Middle Eastern conflict. Willie Nelson became so enamored with the performance of his wife’s clean-running, biodiesel-fueled Mercedes that he created his own biodiesel product, BioWillie. “There is really no need going around starting wars over oil,” said Nelson. “We have it here at home. We have the necessary product; the farmers can grow it.”


Why Biofuels?

Many dream that, with the growth of renewable electricity — namely, solar, wind, and electric vehicles — we can displace coal, oil, and natural gas, all while carrying on with our current standard of living. Sadly, even disregarding the innumerable challenges of so-called renewables, many things cannot be electrified (and even if they can be, electricity still derives its power from fossil fuels). Anything related to long-haul shipping — semitrucks, planes, and ships — is currently a no-go. Why? As Friedemann bluntly puts it, “There is no polite way to say this: batteries have a weight problem.” Electric semitrucks do not exist because their batteries would consume over half the cargo load (for long-haul trips, i.e., 900 miles, a truck needs a 54,000-pound battery and would exceed the maximum road weight even with no cargo load). Another problem is charging time.

“Truckers cannot sit around for 12 unpaid hours honing life skills and learning to crochet while waiting for the battery to recharge,” writes Friedemann. “Oxford professors estimated that the power needed to charge just one truck’s battery using fast charging in 30 minutes would use, over the course of a year, as much power as 4,000 households.” (And while Tesla does advertise a Semitruck, it has yet to be deployed over four years later. “You can reserve yours now with a $20,000 deposit,” says Friedemann. “When you will get your truck… nobody knows.”)


These same weight and charging issues don’t get easier to resolve with container ships, Boeing 747s, or industrial kilns for manufacturing. The current solution? Biodiesel. Renewable, commercial, and biodegradable, biodiesel is the only alternative fuel that has passed the Environmental Protection Agency’s emission standards, reducing carcinogenic compound emissions by up to 85%. The US now produces over 117,000 barrels of biodiesel per day, a number that is expected to increase by 10% over the course of 2022. “Biodiesel is the great hope, our main hope, to replace diesel for transportation and fossils in manufacturing,” says Friedemann. (Nothing else, including renewable diesel, has been deployed on a large commercial scale yet).

The catch? It’s not a drop-in fuel. Most diesel engines today can’t sustain more than 20% biodiesel (B20) without engine modifications. Another concern is scale. 68% of US biodiesel comes from soybeans, 11.5% from used cooking oil (UCO), and 5% from animal and other fats. Even if all soybean crops (a quarter of America’s cropland) were devoted to making biodiesel, it would produce just 5.7 billion gallons of fuel (as compared to the 46 billion gallons of diesel used by the US annually). “If the US cannot make enough biodiesel from plants, then the question becomes: can we step up our fast-food game?” asks Friedemann. “How about we Americans join up and every Monday night ply our tables and our bellies with fried food?” Unfortunately, more obesity is not the answer. We burn too much fuel: even if Americans managed to consume fifteen times more fast food, biodiesel production would still only amount to half of oil diesel consumption.

Renewable Diesel & Jet Fuel

And so, we come to green crude: a renewable, drop-in fuel that is just gaining commercial scale. Chemically the same as petrodiesel, renewable diesel meets the diesel standards of ASTM D975, meaning it can be used by existing diesel trucks, integrated into the current distribution system, and flow through 190,000 miles of oil pipelines, all without causing a hitch. Neste, currently the largest producer of renewable diesel and jet fuel in the world, boasts that “the fuel can be blended in any ratio with fossil diesel — or used neat (100% concentration).” It also burns up to 90% less greenhouse gas (GHG) emissions, performs better in frigid conditions than diesel, and has a much longer shelf-life than biodiesel. Still, some companies hope to go even further: renewable diesel, while chemically distinct from biodiesel, is derived from the same waste feedstocks — used cooking oil, waste animal fats, crop residues, etc. — bringing us back to the same old issue of scalability. Dr. Jennifer Holmgren, CEO of LanzaTech, one of the few early biofuel startups still in existence, hopes to overcome this issue by recycling industrial waste gases instead of feedstocks. The company, which originally started as a biofuels project, soon transitioned into synthetic biology, using bacteria to recycle carbon (and other gases) into consumer products and renewable fuels. “When I was at UOP Honeywell, I developed the first sustainable aviation fuels. These were made from oils — fats and greases, right? We flew the first planes … we got ASTM certification, and we showed the world that, yup, you could fly on something other than fossil-derived kerosene,” said Holmgren. “But one of the things that really kept me up at night is, where is the feedstock going to come from for us to be able to make 100 billion gallons of jet fuel from sustainable resources? And so, when I came to LanzaTech, I realized that, if we could take waste and make ethanol, well heck, you ought to be able to take ethanol to jet fuel.” Working with the blessing of investors from Mitsui-Sanko, British Airways, and Shell, LanzaTech spun out an entire company, LanzaJet, devoted to scaling the technology (a derivative of the Fischer-Tropsch process, first developed by Germany in 1925) to convert waste-based, sustainable ethanol to jet fuel. “The founding of the company was really on the basis of this ideal feedstock philosophy, where we take existing high-volume, low-value waste streams from society, industry, and agriculture to produce,” said co-founder and chief scientific officer, Dr. Sean Simpson.

Shooting for Carbon Negative

Ultimately, all the sustainable aviation fuel (SAF) in the world is still a recycling initiative. Many stress that, in order to reverse climate change, we need to move beyond bandage carbon-neutral solutions and towards carbon-negative initiatives. “I believe that you still have to capture what comes out of that plane and convert it back to product,” says Holmgren, who is dissatisfied with winning the sticker prize of “carbon neutral.” While recycled jet fuel burns cleaner, has fewer particulate emissions, and comes out sulfur-free, Holmgren believes that any level of contrails remains an environmental justice issue. Instead of limiting our solutions to greenhouse mitigation strategies, she urges greentech to think bigger, a mindset shift she believes will be more challenging than any technological hurdle we’ve faced before. “I want us not to always frame our solutions in direct replacements,” she concludes. “We want them to substitute, but we want them to be better. That’s our only shot at creat[ing] a greener future.”



About Colbeck: Colbeck is a strategic lender that partners with companies during periods of transition, providing creative capital solutions to meet their evolving needs. You can reach the team at inquiries@colbeck.com.


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