Fuel Production:

Synthetic Diesel and Gasoline

In the United States, sales of synthetic diesel and gasoline reached 45.1 million gallons in 2011 and are expected to reach 82.2 million gallons in 2012.

Synthetic diesel and gasoline, sometimes called “renewable diesel” or “renewable gasoline,” describes fuels that are chemically similar to traditional diesel and gasoline, but are produced from non-petroleum feedstocks, including municipal solid waste and non-food biomass. Global synthetic diesel and gasoline sales totaled 169 million gallons per year (MGY) in 2011 and are expected to grow 84% to 311 MGY in 2012. Revenues from sales of synthetic diesel and gasoline are expected to grow from $507 million to $933 million during this time, due to demand for “drop-in” alternatives to gasoline and diesel that can utilize existing infrastructure.

Production of renewable diesel via hydrotreating of vegetable oils has led advanced biofuel commercialization globally in recent years, but it faces limitations with respect to feedstock. A range of synthetic gasoline and diesel conversion technologies, such as gasification and Fischer-Tropsch synthesis, which can use more abundant and lower cost non-food feedstocks, have only produced limited quantities of fuel to date but are currently moving from demonstration-scale facilities to commercial scale.

Overall, in 2011, 330 MGY of new advanced biorefinery infrastructure for production of synthetic gasoline and diesel was added, with hydrotreating-based renewable diesel capacity accounting for the largest share of added capacity. In 2012, 188 MGY of new production capacity is expected to be added, with several first-of-kind advanced biorefineries coming online. The corresponding capital investments associated with these infrastructure additions are $1.1 billion in 2011 and $1.0 billion expected in 2012.

In the United States, sales of synthetic diesel and gasoline reached 45.1 million gallons in 2011 and are expected to reach 82.2 million gallons in 2012. Annual capacity additions are anticipated to drop from 75 MGY in 2011 to 13.3 MGY in 2012. Among advanced biofuel categories, demand for aviation biofuels is currently having the greatest impact on synthetic diesel biorefinery construction, since conversion pathways used to produce renewable diesel and jet fuel are similar. At the end of 2011, the U.S. Navy committed to buying 450,000 gallons of hydrotreated renewable diesel and aviation biofuel from Dynamic Fuels, the largest single government purchase of any biofuel in U.S. history. The Navy has also worked closely with Boeing, consortia of commercial airlines, and government agencies (Department of Agriculture, Department of Energy, and Department of Transportation) to develop supply chains for the expansion of aviation biofuels production. Renewable diesel, accordingly, has emerged as a near-term growth opportunity in the United States with at least 200 MGY of production capacity projected to come online in 2013.

Economic Impact

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