Zero-emission vehicles may get the headlines, but in reality, we’ll need growth in every clean vehicle technology and alternative fuel for trucking fleets to meet regulatory requirements and sustainability goals. Renewable diesel is a fast-growing, lower-carbon alternative fuel that fleets can use today as a drop-in solution, without having to invest in new equipment or fueling infrastructure.

According to the State of Sustainable Fleets 2024 Market Brief, the fifth such report, the industry is entering a “period of peak complexity at this early stage of a sustainable transition.” The 2024 report will be released on May 20 at the Advanced Clean Transportation Expo in Las Vegas.

“The last two years of decisive new emissions regulations and the complexity that come with adopting any new technology, let alone multiple new clean technologies, compounds confusion for fleets,” said Nate Springer, vice president market development, TRC Companies.

“When we look at all of this from a fleet perspective, it seems like fleets are faced with this dizzying array of options, not only to meet regulatory requirements, but also to meet their sustainability goals or their customers’ sustainability goals,” said Drew Cullen, Penske senior VP of fuels and facility services, in a media briefing May 14. Penske is one of the report’s sponsors.

“Each carries its own complexities, compounded by the fact that there’s a rapid evolution going on with the technology here that makes it really challenging in the fleet planning space.”

About the State of Sustainable Fleets Report

The 2024 Market Brief is the fifth annual technology-neutral analysis of insights and trends for on-road clean vehicle technologies, produced by State of Sustainable Fleets.

The core of the study is a survey of nearly 200 fleet operators and decision-makers at early adopter fleets, providing sector-specific insights into adoption of battery-electric, natural gas, propane, and hydrogen fuel cell electric vehicles, as well as renewable fuels.

Renewable Diesel Spreading from West Coast

Volvo Trucks North America recently put its stamp of approval on renewable diesel in another sign of the alternative fuel’s growing popularity.

“After many years of testing and evaluating renewable diesel, we decided to make it 100 percent of our fueling of the trucks as they leave the factory,” said Keith Brandis, Vice President, Partnerships and System Solutions with Volvo Trucks North America, in the media briefing.

“We think that sends a signal to the market that it is robust, it does not absorb moisture… or have any warranty issues.”

Fleet adoption of renewable diesel accelerated in 2023, according to the report. Nationally, renewable consumption increased 68% in 2023 compared to 2022.

“This is a pivotal trend that reflects a strategic shift in the fleet industry to reduce emissions without incurring the significant financial and operational risk that the newer ZE options introduce in numerous applications and geographic areas today,” noted the report.

Most consumption was in California, Oregon, and Washington, where carbon credit markets/low carbon fuel standards make renewable diesel competitive in cost to regular diesel.

However, it appears that the fuel is starting to spread into the rest of the country.

New Mexico recently passed a law implementing such a program, and other states are considering it, including New York, New Jersey, Hawaii and Illinois.

What Fleets Say About Renewable Diesel

Fleet interest in renewable alternatives to diesel is significantly driven by vehicle and engine compatibility considerations, according to this year’s fleet survey results.

More fleets that participated in this year’s fleet survey reported using renewable diesel in 2023 (38%) than in 2022 (27%), and it was one of the most popular clean technologies among public/government fleets (40% of responses in this fleet category).

The report found that 75% of fleets currently using RD would buy it in greater quantities if they could access it without additional cost, and 63% have asked their providers about the option.

Of the fleets that would not buy blends with a higher RD-to-diesel ratio than their current standard, several are either already using the highest-ratio blend (R99) or are set on moving away from diesel-like fuels altogether.

This year’s survey showed that RD use among most fleets is limited today. On average, only 3% of the vehicles operated by surveyed fleets used RD in 2023, although the average use rate was slightly higher for public/government fleets (8%). Part of this can be explained by difficulty obtaining supply outside of West Coast markets where low-carbon fuel programs help achieve price-parity with regular diesel.

“But it also could suggest that more fleets are experimenting with RD before rolling out on larger scales,” said the report.

“We are currently using R99 (99% renewable diesel blend) in California and Oregon,” said Fritz Pfauth, fleet strategy and innovation manager for Sunstate Equipment in Arizona, one of the surveyed fleets. “We would use R99 in our other locations if the supply was there.”

Growing the Supply of Renewable Diesel

On the supply side, renewable diesel production and distribution grew substantially last year.

Both capacity and demand for renewable diesel have grown significantly in the western states, said Chevron’s Nuray Elci, VP, innovation and technology ventures, in a media briefing. Refineries are making changes to their hydrotreating units to enable production of renewable diesel or building new units to increase capacity.

“We see continued growth in this as a drop-in solution,” she said, and in fact, Chevron is expanding production of renewable diesel at its refinery in Louisiana from 90 million gallons to 350 million gallons.

However, she added, “We do need to be thinking about the policy, as it only focuses on tailpipe emissions. It doesn’t really address the carbon intensity solutions out there that can achieve [emissions reductions] much faster [than zero-emission vehicles.]”

Neste has been expanding its renewable diesel production operations beyond the West Coast. In 2023, the company partnered with Hightowers Petroleum and Coleman Oil Company in the Midwest and Washington, respectively, to distribute renewable diesel more widely.

Market analyst S&P Global Mobility predicts that biomass-based diesel — mostly renewable diesel — will account for 10% of the diesel-like fuel consumed by the transportation sector by 2030. This would be a significant jump from 2022, when bio-based diesel accounted for 2% of the diesel consumed in the U.S., noted the report.

In addition, fuel producers are helping fleets access renewable diesel by blending it not only with petroleum-based diesel but also with biodiesel at up to 20%, according to the report.

Renewable Diesel Ramp-up Hiccups

One downside, according to the market brief, is that efforts to grow the supply of renewable diesel could be making its carbon intensity scores worse.

Producers have relied on a wider variety of feedstock, some of which isn’t as low in carbon intensity. In 2023, the average carbon intensity of renewable diesel increased 15%, which resulted in higher GHG emissions per gallon than the previous year.

Whether producers will be able to access their preferred, lower-carbon intensity feedstocks at competitive prices while production expands will determine how much of a greenhouse gas emissions advantage RD will give fleets, notes the report.

In addition, a report from Reuters appears to indicate that the refining industry may have been overly eager to get ahead of demand.

Reuters reports that U.S. renewable diesel production capacity nearly quadrupled following the coronavirus pandemic — from 791 million gallons a year in 2021 to 3 billion gallons by 2023. However, that “has created a supply glut” it reported.

“Turmoil in the biomass-based diesel sector, an umbrella term for renewable diesel and biodiesel, could become a roadblock to future investments in biofuels, the U.S. Energy Information Administration (EIA) said this year. That could potentially stall the transition away from traditional fossil fuels,” according to the report.