Oil refiners are facing a drop in used fats for use as feedstocks in biofuels due to restaurant closures during COVID-19 lockdowns, Bloomberg reported on 21 November.

The shortfall in supplies due to the global pandemic came against a backdrop of refineries being converted into renewable diesel plants, Bloomberg said.

California, for example, was one of the world’s biggest markets for renewable diesel, partly due to a decade-long subsidy programme designed to lower emissions from transport fuels.

The incentives had prompted US refiners including Phillips 66, Marathon Petroleum, HollyFrontier and Valero Energy to develop biofuel plants that ran on a mixture of used cooking grease, discarded animal fat from abattoirs and oil made from soyabeans and corn. At least 10 projects were planned over the next few years in the USA, according to Credit Suisse Group.

However, if all of the plants were built, the demand for raw materials could rise seven-fold to about 40bn pounds/year by 2025, according to Ryan Standard, director of price reporting agency Jacobson Market Intelligence.

“I don’t think there is going to be enough,” he was quoted as saying.

Used cooking oil (UCO) and US beef fat, known as tallow, accounted for 64% of the feedstock used to make renewable diesel last year in California, Bloomberg said.

According to forecasts by OpenTable, one in four US restaurants would go out of business as COVID-19 kept people home, leading to a drop in used cooking oil.

Meanwhile, in San Francisco, Phillips 66 was currently converting its refinery in the region into one of the world’s largest renewable fuel plants, Bloomberg said.

Operations could start by 2024, producing more than 680M gallons/year of renewable diesel and gasoline, and also sustainable jet fuel.

Securing the feedstock it needed – including UCO – would be challenging, spokesperson Joe Gannon accepted. However, with access to docks, he said the facility could bring in cooking oil, fats, greases and vegetable oils from around the world.

As supply tightened, prices were rising with the cost of tallow set to rise by about 20% in the next five years, while used cooking oil would become 16% more expensive, according to data from Stratas Advisors.