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Ron Batey, director of refined fuels pricing and economics at CHS, gives his outlook on changes in future fuel and energy sources and potential impacts on agriculture.
The energy industry is changing and renewable fuels and electric-powered vehicles are gaining popularity. That evolution will continue, says Ron Batey, director of refined fuels pricing and economics at CHS.
“We’re exploring a variety of energy solutions at CHS and key indicators today show that we’re going to have a mix of solutions between electrification, biofuels and renewable diesel,” Batey says.
Renewable diesel is gaining momentum. Over the next three to five years, Batey expects production capacity to grow to up to 79 billion gallons a year.
“We’re witnessing the birth of a new industry when it comes to renewable diesel and a few billion gallons of renewable diesel have come online this year.”
That growth is being driven by federal and state energy policies and financial incentives. The Renewable Fuel Standard is a federal program that mandates a minimum volume of renewable fuels be included in the nation’s fuel supply. California, Oregon and Washington have all passed low-carbon fuel standards, which encourages use of low-carbon and renewable fuels in those states. Batey anticipates that as long as policy support exists, the renewable fuels industry will continue to grow.
While low-carbon fuels are one way to help decarbonize transportation, Batey expects traditional diesel will still be needed.
“Even if you took all the vegetable oils on Earth, we’d still only be able to meet 10% to 15% of the global diesel demand [with renewable diesel made from vegetable oil as feedstock],” he says. “Renewables are part of the solution, but I don’t anticipate they will take over traditional diesel.”
