WEBVTT - Greasing the Way to Sustainable Transport 0:00:00.120 --> 0:00:03.040 I'm Dana Perkins, and you're listening to Bloomberg Switched on 0:00:03.320 --> 0:00:05.920 the B n e F podcast. In today's show, we 0:00:06.000 --> 0:00:10.280 talk about renewable diesel. It has potential to decarbonize some 0:00:10.480 --> 0:00:13.280 of the hard to abate sectors. So while all of 0:00:13.320 --> 0:00:16.000 this talk of vaccines might have some of us streaming 0:00:16.040 --> 0:00:18.760 of a beach vacation or when we're going to need 0:00:18.800 --> 0:00:21.759 to travel for work, again, that makes me think about planes, 0:00:22.079 --> 0:00:25.480 one of the hard to decarbonize parts of transportation. Shipping 0:00:25.800 --> 0:00:29.400 just another example. Renewable diesel presents part of the solution. 0:00:29.720 --> 0:00:32.600 And on this week's podcast, Mark Taylor and I sit 0:00:32.640 --> 0:00:35.720 down with Daisy Morgebar, an oil analyst here at B 0:00:35.840 --> 0:00:38.200 and EF. She talks to us about a research note 0:00:38.240 --> 0:00:41.880 that she recently wrote titled Renewable Diesel a green Light 0:00:41.960 --> 0:00:44.479 for Refiners. You can find it at benof Go, on 0:00:44.520 --> 0:00:47.559 the Bloomberg terminal at BANF dot com and on BNF's 0:00:47.560 --> 0:00:50.360 mobile app. And our usual reminder, we do not provide 0:00:50.360 --> 0:00:53.400 investment or strategy advice, and we have a full disclaimer 0:00:53.440 --> 0:00:55.680 at the end of the show. But now let's hear 0:00:55.720 --> 0:01:05.440 about renewable diesel with Mark and Daisy. So we're recording 0:01:05.440 --> 0:01:08.720 this the day after Thanksgiving, our American Thanksgiving Black Friday. 0:01:08.920 --> 0:01:10.399 For the rest of the world. I guess it's the 0:01:10.440 --> 0:01:13.360 official start to the well, the holiday season, I guess 0:01:13.400 --> 0:01:16.920 you could say. And Daisy are our guest today, was 0:01:16.959 --> 0:01:19.640 telling us this really cool story about this weird thing 0:01:19.760 --> 0:01:21.959 or interesting thing that happens in Finland. We're just going 0:01:22.040 --> 0:01:23.360 to pass to her to start off the show with 0:01:23.480 --> 0:01:27.560 this story. So, in Finland, there's this initiative that has 0:01:27.600 --> 0:01:30.360 been running for the last few years now where basically 0:01:30.440 --> 0:01:34.039 households are in courage to drop off their fat from 0:01:34.080 --> 0:01:37.520 their Christmas ham to these recycling points and then nest Day, 0:01:37.600 --> 0:01:41.319 which is a big Finish renewable fuels producer, collects that 0:01:41.840 --> 0:01:45.080 waste fat and turns it into renewable fuel. Hey, they're 0:01:45.120 --> 0:01:48.760 collecting all of this stuff from you said. Ham is ham, 0:01:48.800 --> 0:01:54.000 the traditional like Christmas holiday seasonal meal in Finland. So okay, 0:01:54.040 --> 0:01:56.920 So they're collecting all of this waste by product from 0:01:56.920 --> 0:02:00.640 the ham and instead of throwing it into some sort 0:02:00.680 --> 0:02:03.720 of a handpost heap, they're sending it off to become 0:02:04.160 --> 0:02:07.400 renewable diesel. So can you explain to us what renewable 0:02:07.400 --> 0:02:10.720 diesel is. Renewable diesel is is a biofuel that can 0:02:10.880 --> 0:02:15.120 substitute fossil based diesel, and it's sort of big selling 0:02:15.120 --> 0:02:17.720 point I guess is that it's it's so chemically similar 0:02:17.760 --> 0:02:20.799 to regular diesel that it can be used as a 0:02:20.880 --> 0:02:24.000 like for light replacement in a diesel engine. So other 0:02:24.000 --> 0:02:27.960 biofuels like ethanol biodies are quite different products, so they 0:02:28.000 --> 0:02:31.480 can only be blended into regular fuels in small amounts, 0:02:31.560 --> 0:02:33.840 and so that's kind of why there's a lot of 0:02:33.919 --> 0:02:37.279 interest in renewable diesel because it doesn't have that limitation. 0:02:37.639 --> 0:02:41.680 So being able to use renewable diesel in its pure form, 0:02:41.680 --> 0:02:45.359 not blended into fossil diesel, is a huge advantage. It 0:02:46.160 --> 0:02:49.440 means obviously there's a lot of carbon savings, but it 0:02:49.480 --> 0:02:52.560 can also drop in seamlessly to the existing supply chain, 0:02:52.680 --> 0:02:57.079 so existing engines, transport infrastructure, and also the way it's 0:02:57.080 --> 0:03:01.320 produced has significant overlaps with convention or refining as well. Well. 0:03:01.360 --> 0:03:03.000 I think I missed it. Can you explain why it's 0:03:03.160 --> 0:03:06.800 like for light brade Basically, it's it's so chemically similar 0:03:06.960 --> 0:03:10.240 to fossil based diesel, so it can be used in 0:03:10.240 --> 0:03:13.760 in the same engines or the same sort of pipelines. 0:03:14.000 --> 0:03:16.280 So this is new to me because when I think 0:03:16.320 --> 0:03:18.400 of this, when I first thought heard the term renewable diesel, 0:03:18.440 --> 0:03:21.240 immediately thought of biofuels, which actually have to be blended, 0:03:21.240 --> 0:03:24.040 do they not? And can you explain the difference between 0:03:24.480 --> 0:03:27.760 bio diesel and renewable diesel, So this is this is 0:03:27.800 --> 0:03:31.440 a common kind of confusion. Bio diesel and renewable diesel 0:03:31.480 --> 0:03:35.360 are two very different products, so they have various similarities, 0:03:35.400 --> 0:03:38.560 but they also have differences. So on the similarity side, 0:03:39.080 --> 0:03:42.360 they both displace fossil based diesel and can both be 0:03:42.480 --> 0:03:47.760 used in diesel engines. And they also made from similar feedstocks, 0:03:47.760 --> 0:03:52.120 so that's anything any sort of organic oil based feedstock 0:03:52.200 --> 0:03:56.720 like vegetable oils or waste facts and greases can both 0:03:56.720 --> 0:03:59.840 be used to make biodies or renewable diesel. But the 0:04:00.080 --> 0:04:05.160 difference is basically how you process those feed stocks, so 0:04:05.200 --> 0:04:08.920 the production process results in very different products. You've got 0:04:08.920 --> 0:04:12.960 bio diesel, which is a chemically different product and therefore 0:04:13.400 --> 0:04:16.599 it needs to be blended in small amounts with regular 0:04:16.640 --> 0:04:19.320 diesel in order for it to to avoid kind of 0:04:19.360 --> 0:04:23.400 engine damage or performance issues in your diesel engine, whereas 0:04:23.440 --> 0:04:26.800 renewable diesel because it's so similar to fossil diesel, you 0:04:26.839 --> 0:04:29.240 can use it as a as a light foloight replacement. 0:04:29.400 --> 0:04:33.760 And what are they each made of, so it really varies. Basically, 0:04:33.760 --> 0:04:37.360 it's any kind of oil based organic matter, So that 0:04:37.400 --> 0:04:42.599 can range from finish ham waste, yeah, exactly on one 0:04:42.600 --> 0:04:44.880 side of the spectrum, and then on the other you've 0:04:44.920 --> 0:04:48.120 got Traditionally, when people think of bio fuels, they think 0:04:48.240 --> 0:04:52.280 of crops like soybean or rape seed oil or palm 0:04:52.320 --> 0:04:55.640 oil for example. And obviously in the past these have 0:04:56.480 --> 0:04:59.719 come up against a bit of scrutiny, not only because 0:05:00.200 --> 0:05:04.719 of creating high competition for food resources, but also it's 0:05:04.839 --> 0:05:08.920 land impact because presumably ramping up supply of these feed 0:05:08.960 --> 0:05:14.039 stocks for biofuels would necessitate kind of clearing of land, 0:05:14.200 --> 0:05:16.960 and that's why palm oil's got such a bad rep 0:05:17.080 --> 0:05:21.479 for its associations with deforestation. But there's a kind of 0:05:21.560 --> 0:05:25.640 another area of feed stocks which is kind of growing 0:05:25.640 --> 0:05:29.159 in focus now because there's a heightened awareness around the 0:05:29.240 --> 0:05:33.400 environmental impacts of clearing land, and that is waste products. 0:05:33.400 --> 0:05:38.280 So the ham fat Christmas ham is a great example 0:05:38.480 --> 0:05:42.080 of a kind of a leftover or waste fat being 0:05:42.240 --> 0:05:46.240 recycled into a fuel, and some other waste examples are 0:05:46.360 --> 0:05:49.080 used cooking, all that comes from restaurants, and any sort 0:05:49.120 --> 0:05:53.080 of waste animal fats or grease can be repurposed in 0:05:53.120 --> 0:05:56.080 this way to make a useful product. Is there enough 0:05:56.120 --> 0:05:57.560 of this to make a difference or are there are 0:05:57.560 --> 0:06:00.720 other feedstocks that will make a bigger dent in the supply. 0:06:01.000 --> 0:06:04.080 So this is a question we get a lot, especially 0:06:04.120 --> 0:06:09.960 with production capacity and interest in renewable diesel really ramping up. Yeah, 0:06:10.000 --> 0:06:13.280 so question around where is all the feed stock going 0:06:13.279 --> 0:06:16.240 to come from is a really big kind of uncertainty 0:06:16.400 --> 0:06:19.520 in the market, and I think producers are acutely aware 0:06:19.600 --> 0:06:23.280 of this potential challenge, especially with rising competition in the 0:06:23.360 --> 0:06:26.520 in the production capacity space. Producers are kind of taking 0:06:26.560 --> 0:06:30.480 steps to protect themselves from this potential kind of squeeze 0:06:30.520 --> 0:06:35.440 and supply, particularly where there's a much greater focus on 0:06:35.640 --> 0:06:39.360 waste based in Europe, for example, which has traditionally been 0:06:39.400 --> 0:06:42.880 based on on more crop based feed stocks like palm oil, 0:06:43.200 --> 0:06:45.359 like rape seed oil, but they're trying to move away 0:06:45.360 --> 0:06:48.680 from that and move more towards waste based feed stocks 0:06:48.760 --> 0:06:53.680 because of their kind of lower environmental impacts. So there's 0:06:53.720 --> 0:06:56.480 a few things that producers can do to kind of 0:06:56.480 --> 0:07:00.600 protect themselves against this potential risk. Producers are still investing 0:07:00.880 --> 0:07:02.880 in R and D to kind of open up other 0:07:02.920 --> 0:07:06.080 ways of producing renewable diesel, so that would kind of 0:07:06.200 --> 0:07:08.680 open up a much broader range of fee stocks. So 0:07:09.240 --> 0:07:13.480 one example is something like algae. Another is household waste. 0:07:13.560 --> 0:07:16.160 So this is currently being pilot piloted on a on 0:07:16.200 --> 0:07:19.000 a much smaller scale. That could be one pretty good 0:07:19.080 --> 0:07:22.360 avenue sort of supply in the future, which is essentially 0:07:22.400 --> 0:07:26.600 turning household waste into via a different process to what's 0:07:26.640 --> 0:07:31.040 currently most commercialized, but turning it into renewable diesel as 0:07:31.080 --> 0:07:34.040 well as renewable jet fuel as well. Okay, so in 0:07:34.080 --> 0:07:38.480 the process of making renewable diesel, hydrogen is one of 0:07:38.520 --> 0:07:40.960 the potential ways we can go about making renewable diesel. 0:07:41.000 --> 0:07:43.840 Can you explain a little bit more about how hydrogen 0:07:43.880 --> 0:07:47.440 fits into this equation. There's many ways of making renewable diesel, 0:07:47.560 --> 0:07:51.000 but hydro treatment is by far the most the most 0:07:51.040 --> 0:07:55.520 commercialized production route, and that's actually a reason why refiners 0:07:55.520 --> 0:07:58.440 are such big players in this market. So right now, 0:07:58.720 --> 0:08:03.160 more than of production capacity for renewable diesel is owned 0:08:03.160 --> 0:08:06.800 by all refiners, and a big reason behind that is 0:08:06.840 --> 0:08:11.600 that they already have hydro treatment capability as well as 0:08:11.720 --> 0:08:15.360 a well established supply of hydrogen, because most refiners are 0:08:15.360 --> 0:08:19.800 able to produce hydrogen in a refinery by reforming natural gas. 0:08:20.240 --> 0:08:24.400 So making renewable diesel is a lot more hydrogen intensive 0:08:24.680 --> 0:08:28.040 than the conventional refining and so that actually kind of 0:08:28.080 --> 0:08:32.160 limits how much renewable diesel a refiner can produce from 0:08:32.200 --> 0:08:36.640 their existing setup, and renewable diesel production is much more 0:08:36.720 --> 0:08:41.880 hydrogen intensive than conventional refining, and at the moment, most 0:08:42.080 --> 0:08:47.040 of this hydro treating or renewable diesel production that refiners 0:08:47.080 --> 0:08:51.120 are going after will be conventional hydrogen that they've already 0:08:51.160 --> 0:08:54.600 got the capability to produce. But there are kind of 0:08:54.760 --> 0:08:59.200 signs that refiners are entering the green hydrogen space as well, 0:08:59.240 --> 0:09:01.160 and this is particular clear the case in Europe. So 0:09:01.200 --> 0:09:04.560 there's a couple of refineries who are piloting projects to 0:09:04.559 --> 0:09:09.080 to produce green hydrogen in order to facilitate their renewable 0:09:09.080 --> 0:09:12.680 diesel production. Just to clarify, green hydrogen is making hydrogen 0:09:13.000 --> 0:09:18.960 from electrolysis from power from renewable sources. So, Daisy, you know, 0:09:19.000 --> 0:09:21.800 you mentioned earlier that it was used as a feedstock 0:09:21.840 --> 0:09:24.720 for jet fuel, and that is you know, air travel 0:09:24.800 --> 0:09:27.360 is one of those extremely hard to evate sectors. Can 0:09:27.440 --> 0:09:31.120 we talk a little bit about the benefits from a 0:09:31.120 --> 0:09:34.160 carbon standpoint, because this looks like this could be a 0:09:34.200 --> 0:09:37.600 real viable option, there is it not. It's certainly, you know, 0:09:37.679 --> 0:09:42.719 one of the only few available options currently that's already available. 0:09:43.000 --> 0:09:47.360 In terms of carbon savings, renewable diesel is between fifty 0:09:47.400 --> 0:09:52.320 and eighty reduction in carbon emissions, and that kind of 0:09:52.400 --> 0:09:54.720 range is basically based on the feedstocks, so that comes 0:09:54.760 --> 0:09:58.760 back to whether you're using a virgin vegetable oil like 0:09:58.800 --> 0:10:01.400 soybing or if you're using waste which has a much 0:10:01.480 --> 0:10:04.280 much lower carbon intensity. So yeah, the carbon savings are 0:10:04.280 --> 0:10:07.600 really huge. The kind of challenge for the aviation sector 0:10:07.800 --> 0:10:11.400 is that currently renewable jet fuel, which basically kind of 0:10:11.400 --> 0:10:13.840 related to renewable diesel, and it can be produced in 0:10:13.840 --> 0:10:17.440 the same process. The challenge is that it's currently much 0:10:17.480 --> 0:10:21.079 more expensive than fossil based jet fuel. It's between three 0:10:21.120 --> 0:10:23.960 and four times more expensive, and this year has only 0:10:24.360 --> 0:10:29.040 exacerbated that issue because COVID has really weighed down on 0:10:29.320 --> 0:10:31.800 demand for flying because of lockdowns. It's put a lot 0:10:31.840 --> 0:10:34.880 of financial pressure on airlines, so it kind of means 0:10:34.960 --> 0:10:39.600 they're probably less able or willing to voluntarily spend that 0:10:39.679 --> 0:10:43.160 extra money on fuel if they don't have to. If 0:10:43.160 --> 0:10:45.280 it is more expensive and more challenging for airlines in 0:10:45.320 --> 0:10:48.640 the current environment, what is driving the growth of renewable diesel? 0:10:48.760 --> 0:10:52.640 Policy is a really important driver for for this market 0:10:52.679 --> 0:10:55.200 because it is more expensive. And this is the case 0:10:55.440 --> 0:10:59.280 both on road, so passenger cars and trucks, but also aviation. 0:10:59.679 --> 0:11:03.640 So historically aviation has kind of lagged behind in terms 0:11:03.679 --> 0:11:06.559 of policy support, but it is starting to catch up. 0:11:06.840 --> 0:11:09.360 So if we look at California for example, which I 0:11:09.360 --> 0:11:12.240 always use as a case study because it's got one 0:11:12.240 --> 0:11:16.120 of the most kind of comprehensive low carbon fuels programs 0:11:16.280 --> 0:11:19.360 in place, called the Low Carbon Fuel Standard. Last year 0:11:19.840 --> 0:11:25.120 it introduced aviation biofuels into this program, so biofuels for 0:11:25.160 --> 0:11:28.920 aviation could start earning credits which are are really valuable 0:11:29.000 --> 0:11:31.920 as of last year, and since then, the supply of 0:11:31.960 --> 0:11:34.559 renewable jet fuel has has really grown in the state. 0:11:34.840 --> 0:11:38.400 So it just kind of highlights the importance of policy here. 0:11:38.840 --> 0:11:42.360 And another important thing that's happened this year is a 0:11:42.480 --> 0:11:45.040 tax credit in the US which is basically a wand 0:11:45.040 --> 0:11:48.360 out one dollar peck Allen tax credit which is applied 0:11:48.400 --> 0:11:52.079 to renewable diesel, renewable jet fuel, and also bio diesel. 0:11:52.200 --> 0:11:55.040 It seems to be a pretty big credit. Yeah, it's huge. Yeah, 0:11:55.120 --> 0:11:57.840 And this has been a really big factor as to 0:11:57.920 --> 0:12:01.680 why this year in particular, you've got the combination of 0:12:01.920 --> 0:12:05.920 COVID really weighing down on refining margins and creating a 0:12:06.000 --> 0:12:11.160 really difficult environment with low demand for fuels and low 0:12:11.240 --> 0:12:14.640 margins for refiners. Combined with this new tax credit that 0:12:14.679 --> 0:12:17.360 got introduced at the start of this year and is 0:12:17.360 --> 0:12:20.320 now in place until the end of two you get 0:12:20.320 --> 0:12:24.960 this huge divergence in the potential margins whether you're producing 0:12:25.040 --> 0:12:28.920 conventional fuels or bio fuels, and simply because of of 0:12:28.960 --> 0:12:31.680 these huge policy incentives. So this is a really big 0:12:31.720 --> 0:12:35.040 reason why it's happening this year, and secondly why it's 0:12:35.040 --> 0:12:37.960 happening in the US in particular. So the US in 0:12:37.960 --> 0:12:42.240 particular is having a lot of popularity for renewable diesel. 0:12:42.360 --> 0:12:44.880 Is this both both then in terms of production and 0:12:44.960 --> 0:12:48.960 in terms of consumptions. Yeah, definitely, So these policy mechanisms 0:12:49.040 --> 0:12:52.560 have really kind of spurred demand. But also it's not 0:12:52.640 --> 0:12:57.320 just domestic production, but even producers exporting into the US 0:12:57.440 --> 0:13:00.920 are able to take advantage of these credits. So going 0:13:00.960 --> 0:13:04.960 back to nest Day with the Finnish company, they're actually 0:13:05.000 --> 0:13:09.640 the soul exporter of renewable diesel into the US right 0:13:09.640 --> 0:13:12.120 now and it all goes to California. So that again 0:13:12.200 --> 0:13:15.079 just highlights the kind of big draw of these policy 0:13:15.080 --> 0:13:16.920 and centers, and would you say they're the biggest player 0:13:17.000 --> 0:13:19.360 in the market right now. Nest Day are by far 0:13:19.760 --> 0:13:23.800 the world's largest producer of renewable diesel and renewable jet fuel, 0:13:24.080 --> 0:13:27.840 and they're also working on really ramping up their production capacity, 0:13:28.000 --> 0:13:30.200 so they're working on a big expansion at the moment 0:13:30.520 --> 0:13:33.400 in Singapore. Is this a traditional refiner as well? Yeah, 0:13:33.400 --> 0:13:38.320 basically nest Day are originally an oil refiner of Finnish 0:13:38.400 --> 0:13:42.760 oil refiner, but they've really kind of evolved their business 0:13:42.800 --> 0:13:46.280 to be the world's largest producer of renewable diesel and 0:13:46.480 --> 0:13:50.920 renewable jet fuel. So they have plants in Europe and 0:13:50.960 --> 0:13:53.960 they also have a plant in Singapore which they're currently 0:13:54.000 --> 0:13:57.320 working on a big expansion which will really ramp up 0:13:57.360 --> 0:14:00.360 their production capacity not just of renewable diesel, but also 0:14:00.360 --> 0:14:02.480 of renewable jet fuel. So is there a chance that 0:14:02.559 --> 0:14:05.240 I have at this point, whether a flying domestically in 0:14:05.280 --> 0:14:07.960 the United States or internationally, been on a flight that 0:14:08.040 --> 0:14:12.719 has been fueled by renewable diesel. Yeah, the chances are 0:14:12.720 --> 0:14:15.360 that you that you have. And obviously at the moment 0:14:15.400 --> 0:14:17.760 it's just in small blends, but particularly in Europe and 0:14:17.800 --> 0:14:21.120 so Kleem are an airline who have been particularly active 0:14:21.200 --> 0:14:23.640 in the renewable jet fuel space, but more and more 0:14:23.640 --> 0:14:27.200 in Europe countries are looking to implement blending man dates 0:14:27.240 --> 0:14:30.760 on renewable jet fuel, just like we do on road. 0:14:31.240 --> 0:14:33.560 So on road it's not uncommon to have maybe a 0:14:33.560 --> 0:14:36.960 five or ten percent blend mandate in your gasoline or diesel. 0:14:37.080 --> 0:14:41.280 This approaches is being slowly adopted for jet fuel. So 0:14:41.640 --> 0:14:44.960 Norway were the first country to implement a blending mandate 0:14:45.160 --> 0:14:48.600 of this type, which started this year. Sweden of following 0:14:48.800 --> 0:14:51.800 in their footsteps with a blend mandate starting next year, 0:14:51.840 --> 0:14:54.680 I believe, and there's a couple of other countries in 0:14:54.720 --> 0:14:58.160 Europe who are also considering a similar approach like France, 0:14:58.160 --> 0:15:01.800 for example, have set a target of two blend of 0:15:02.080 --> 0:15:04.160 renewable jet fuel. So is it safe to say that 0:15:04.200 --> 0:15:07.200 we've not seen even the beginning of the potential growth 0:15:07.200 --> 0:15:10.200 in this space. It's definitely a market that has a 0:15:10.200 --> 0:15:12.480 lot of room to grow. You know that the pace 0:15:12.560 --> 0:15:15.440 of that growth I think will be kind of dependent 0:15:15.520 --> 0:15:19.920 on policy. It's like I mentioned before about the cost, 0:15:20.440 --> 0:15:22.960 this is something that needs to be kind of supported 0:15:23.000 --> 0:15:26.160 through policy, which is not quite there yet, but we 0:15:26.200 --> 0:15:30.440 think that, you know, as policy starts to be implemented, 0:15:30.560 --> 0:15:36.120 this will really help the market take off take off unintended, 0:15:37.000 --> 0:15:39.480 So there's going to be still a carbon footprint to this, 0:15:39.760 --> 0:15:42.320 and there's still tailpipe emissions. So can you describe the 0:15:42.440 --> 0:15:44.920 kind of what the carbon savings are or or the 0:15:45.000 --> 0:15:48.160 environmental impact. Yes, So the savings when you're looking at 0:15:48.480 --> 0:15:51.400 renewable diesel or renewable jet fuel is between fifty and 0:15:51.480 --> 0:15:56.400 eighty percent carbon intensity reduction versus fossil fuels. So it's 0:15:56.400 --> 0:15:59.440 by no means a zero carbon fuel, particularly for the 0:15:59.480 --> 0:16:02.960 aviation sector, because there are kind of few alternatives out 0:16:02.960 --> 0:16:05.760 there at the moment. So, you know, the two clean 0:16:06.160 --> 0:16:08.720 energy solutions that spring to mind for aviation would be 0:16:08.800 --> 0:16:13.200 something like hydrogen or electric planes. And these two options 0:16:13.280 --> 0:16:16.920 are you know, either a couple of decades away at least, 0:16:17.080 --> 0:16:21.560 or in the case of electrification, probably only really feasible 0:16:21.600 --> 0:16:25.480 for short haul distances. So, while it's not perfect by 0:16:25.520 --> 0:16:28.800 any means, biofuels are considered to be one of the 0:16:28.920 --> 0:16:33.000 key solutions that are available now, able to drop into 0:16:33.040 --> 0:16:36.480 existing infrastructure without the need for a complete overhaul in 0:16:36.680 --> 0:16:40.520 refueling airports and also the aircrafts. So it is kind 0:16:40.520 --> 0:16:44.720 of seen as a a big opportunity. Okay, I'm coming over. 0:16:44.800 --> 0:16:47.320 It sounds cool, sounds cool. Can I ask one more 0:16:47.360 --> 0:16:50.880 question about the European policies like two percent blending mandates, 0:16:50.920 --> 0:16:52.760 You know all that they're not as aggressive as the 0:16:52.760 --> 0:16:55.880 California policies. Are they having an effect? Are they having 0:16:55.880 --> 0:16:58.680 a similar effect of getting companies excited and getting getting 0:16:58.680 --> 0:17:00.960 after it. Yeah, it's a good point in and let 0:17:01.000 --> 0:17:03.200 you say, two percent doesn't sound like much, and it's 0:17:03.200 --> 0:17:06.720 even lower right now in Norway and in Sweden they're 0:17:06.720 --> 0:17:12.000 starting really really low and gradually increasing every year with 0:17:12.080 --> 0:17:15.840 really small incremental steps. And it's it's worth noting here 0:17:16.320 --> 0:17:19.120 the size of the renewable jet fuel market right now 0:17:19.280 --> 0:17:22.440 is so small, so it currently accounts for zero point 0:17:22.520 --> 0:17:26.119 one percent of jet fuel, so point zero one percent 0:17:26.160 --> 0:17:30.480 of Dana's ride on an airplane region my ride. Come on, Mark, 0:17:30.560 --> 0:17:34.240 you travel too? Were both expats. Yeah, I guess we're 0:17:34.520 --> 0:17:37.399 I guess we're expats on this island for the foreseeable future. 0:17:37.880 --> 0:17:41.320 So I think basically policymakers are kind of conscious of 0:17:41.520 --> 0:17:46.320 not creating mandates that are unachievable or too much too soon, 0:17:46.800 --> 0:17:50.480 because it could potentially encourage the wrong sort of growth. So, 0:17:50.680 --> 0:17:53.879 you know, things like the EU are looking to phase 0:17:53.880 --> 0:17:56.359 out their use of palm oil in renewable fuels because 0:17:56.400 --> 0:18:01.080 historically they've been quite reliant on palm oil too as 0:18:01.160 --> 0:18:04.600 quite a big contributor to its feed tomas. So ramping 0:18:04.680 --> 0:18:09.280 up potential demand quicker than supply could potentially catch up. 0:18:09.480 --> 0:18:11.919 I think is a bit of a risk. Quite a 0:18:11.920 --> 0:18:14.600 bit of popularity at the moment for renewable diesel and 0:18:14.960 --> 0:18:18.680 looking like potentially gaining popularity in the future. So as 0:18:18.720 --> 0:18:22.000 you started to research this topic, oftentimes we find a 0:18:22.000 --> 0:18:25.960 lot of answers which were therefore published in this research note. 0:18:26.240 --> 0:18:29.399 It raises more questions for US what were the sorts 0:18:29.400 --> 0:18:31.639 of things that were raised for you as kind of 0:18:31.640 --> 0:18:34.320 follow on questions that you weren't able to get to 0:18:34.520 --> 0:18:37.760 in the scope of your research for this particular research report. 0:18:38.119 --> 0:18:42.400 I think the availability of sustainable feedstocks is a huge 0:18:42.480 --> 0:18:45.119 question that that keeps coming up, and it's one of 0:18:45.160 --> 0:18:49.119 the biggest questions that we get with regards to this 0:18:49.200 --> 0:18:52.600 big ramp up in in production capacity. So this is 0:18:52.640 --> 0:18:56.040 something that you know, I want to look further into. 0:18:56.400 --> 0:18:59.560 I think this is something that producers are really aware of, 0:18:59.720 --> 0:19:02.600 and you can see that by some of the actions 0:19:02.680 --> 0:19:05.920 taken by some of the big producers who was sort 0:19:05.920 --> 0:19:08.520 of trying to, you know, take these steps to shore 0:19:08.600 --> 0:19:12.000 up certainty of supply, Like what are they doing? Yeah, 0:19:12.040 --> 0:19:16.199 So one of the kind of strategic moves that some 0:19:16.280 --> 0:19:18.520 of the big players are doing are kind of making 0:19:18.560 --> 0:19:22.520 these partnerships. So one example is Diamond Green Diesel, which 0:19:22.560 --> 0:19:25.119 is the biggest producer in the US right now, is 0:19:25.119 --> 0:19:28.800 actually a joint partnership between a joint venture between a 0:19:28.920 --> 0:19:33.439 US refiner, Valero and Darling Ingredients. So Darling Ingredients is 0:19:33.440 --> 0:19:38.480 a company that basically collects and recycles waste fats from 0:19:38.600 --> 0:19:42.400 restaurants and things like Talo from slaughter houses. It collects 0:19:42.400 --> 0:19:45.480 all of this and recycles it. So this joint venture 0:19:45.560 --> 0:19:50.359 is really mutually beneficial because Valero or Diamond Green Diesel 0:19:50.440 --> 0:19:54.720 basically gets this priority access to this highly competed feedstock 0:19:55.000 --> 0:19:57.199 which has a really low carbon intensity and gets a 0:19:57.200 --> 0:19:59.359 lot of rewards. So I think that this could be 0:19:59.400 --> 0:20:02.280 a growing trend that we see where producers are increasingly 0:20:02.359 --> 0:20:06.480 positioning themselves to kind of get this priority access to 0:20:06.600 --> 0:20:09.679 feed stock. So another example is nest Date, who are 0:20:10.040 --> 0:20:13.000 the world's largest producer. So in June this year, they 0:20:13.040 --> 0:20:17.280 announced a partnership with McDonald's in the Netherlands. So basically 0:20:17.400 --> 0:20:20.160 McDonald's will supply nest Date with all of the US 0:20:20.200 --> 0:20:22.800 cooking a used to make their French fries in all 0:20:22.800 --> 0:20:25.080 of its restaurants in the Netherlands. Nest they will then 0:20:25.119 --> 0:20:29.040 recycle this into renewable diesel and then that fuel will 0:20:29.119 --> 0:20:32.240 be then be used in the trucks that deliver to McDonald's. 0:20:32.760 --> 0:20:37.160 And so, both from a kind of transport decarbonization perspective 0:20:37.280 --> 0:20:40.199 and also a circular economy, this is an area that 0:20:40.359 --> 0:20:42.240 I think we'll get a lot of attention going forward. 0:20:42.359 --> 0:20:46.120 And it's like I said, a mutually beneficial partnership. So 0:20:46.560 --> 0:20:50.399 companies like McDonald's are looking to improve their sustainability and 0:20:50.440 --> 0:20:54.800 reducing their carbon emissions, and obviously from the biofuel producer's perspective, 0:20:54.880 --> 0:20:57.760 this secures supply of a highly sought after feed stock, 0:20:58.119 --> 0:21:01.320 so it's kind of a win win, and this model 0:21:01.520 --> 0:21:04.600 can be replicated over many times, not least looking just 0:21:04.640 --> 0:21:07.480 a McDonald's, who obviously have a huge global footprints, so 0:21:07.520 --> 0:21:10.000 they could kind of replicate this in other countries, but 0:21:10.080 --> 0:21:13.159 other also, other similar restaurant chains could look to do 0:21:13.240 --> 0:21:17.280 something similar. And also this this sort of close loop 0:21:17.359 --> 0:21:20.879 concept can also be applied on a city level too, 0:21:20.920 --> 0:21:24.760 so looking at NESTA again, they launched a partnership with 0:21:24.800 --> 0:21:28.520 the city of Oakland in California, whereby basically all of 0:21:28.560 --> 0:21:31.920 the kind of waste cooking oils and greases and other 0:21:32.080 --> 0:21:35.520 kind of waste fats from the city was collected and 0:21:35.560 --> 0:21:39.719 supplied to nest Day, who will recycle it into renewal 0:21:39.800 --> 0:21:43.360 diesel which will then fuel the city's fleet. So yeah, 0:21:43.440 --> 0:21:47.480 I think this is kind of a cool circular economy which, 0:21:47.760 --> 0:21:50.280 like I said, could be replicated many times over, and 0:21:50.400 --> 0:21:52.879 I think is is something kind of to keep an 0:21:52.920 --> 0:21:54.959 eye on. Yeah, so what it sounds like if we're 0:21:54.960 --> 0:21:58.280 going to see a lot more effort to collect any 0:21:58.560 --> 0:22:02.760 grease and oils and fats you know that exists anywhere 0:22:02.920 --> 0:22:05.240 in the market that can be taken up before Yeah, 0:22:05.280 --> 0:22:09.440 finding other feed stacks. Yeah, that's crazy, that's cool. Yeah, definitely, 0:22:09.480 --> 0:22:11.879 I think it's I think it's an area that needs 0:22:11.960 --> 0:22:14.080 still needs a bit of work to kind of streamline, 0:22:14.200 --> 0:22:16.280 but there's definitely a lot of attention on it right now. 0:22:16.400 --> 0:22:19.800 And just the other day, in fact, I saw a 0:22:19.840 --> 0:22:23.040 bio fields producer and in the U a E has 0:22:23.080 --> 0:22:26.359 made an app to facilitate the kind of track and 0:22:26.400 --> 0:22:28.719 monitor the delivery and collection of use cooking on from 0:22:28.800 --> 0:22:32.600 McDonald's restaurants. Again, so I think this is something that's 0:22:33.040 --> 0:22:36.480 really gonna continue going forward, trying to streamline this process 0:22:36.520 --> 0:22:39.280 and make it a lot more transparent. I know it's different, 0:22:39.320 --> 0:22:43.119 but this really reminds me of you know, the It 0:22:43.119 --> 0:22:48.320 reminds me back to the future and the DeLorean time machine. Yeah, 0:22:48.359 --> 0:22:50.640 I mean I could have a DeLorean that is now 0:22:50.920 --> 0:22:56.639 renewable diesel. Yeah, there you go. On that note. On 0:22:56.760 --> 0:23:03.080 that note, back to the future, guys, On that note, 0:23:03.240 --> 0:23:06.120 let's see how this develops in Finland in the next 0:23:06.119 --> 0:23:08.600 couple of weeks. We are not too far from the 0:23:08.680 --> 0:23:12.920 Christmas holiday and the cash cow of renewable diesel coming 0:23:12.960 --> 0:23:16.760 in to Finland, and you know, maybe Oakland. Daisy, thank 0:23:16.760 --> 0:23:19.040 you so much for joining us today. Thanks for helping me. 0:23:26.960 --> 0:23:29.560 Today's episode of Switched On was edited by Rex Warner 0:23:29.680 --> 0:23:31.840 of Grace Stoke Media. Bloomberg an e F is a 0:23:31.880 --> 0:23:34.720 service provided by Bloomberg Finance LP and its affiliates. This 0:23:34.800 --> 0:23:37.560 recording does not constitute, nor should it be construed as 0:23:37.640 --> 0:23:41.960