While both are made from the same feedstocks, soy biodiesel and renewable diesel have different production processes, which results in distinct fuel properties and feedstock economics. The key differences lie in their chemical composition and how they’re made, which directly impacts their value and market viability.
Production and Chemical Differences
The production methods are the core difference between the two fuels. This dictates everything from their final properties to their production costs.
- Soy Biodiesel: Also known as fatty acid methyl ester (FAME), biodiesel is made through a process called transesterification. This relatively simple chemical reaction uses vegetable oil (like soybean oil) and an alcohol (typically methanol) with a catalyst. The result is a fuel that is chemically different from petroleum diesel. This process also creates a co-product, glycerin, which must be separated and sold or repurposed. Biodiesel has a higher freezing point and cannot be transported through existing petroleum pipelines, limiting its blend ratio with petroleum diesel (typically to B20, or 20% biodiesel).
- Renewable Diesel: This fuel is produced through a more complex process called hydrotreating, which is similar to the “cracking” process used in petroleum refineries. It uses high temperatures, high pressure, and a catalyst with hydrogen to remove oxygen from the fatty acids. The final product is a pure hydrocarbon fuel that is chemically identical to petroleum diesel. Because of this, it’s considered a “drop-in” fuel that can be used in any diesel engine without modification and can be blended at any ratio, including 100% pure renewable diesel. This fungibility with petroleum diesel is a major advantage.
Feedstock Economics: Competition and Value
The different production processes create a competition for the same pool of feedstocks. While both fuels can be made from a variety of vegetable oils and animal fats, their relative values and production costs influence which feedstock is used more.
- Feedstock Requirements: Renewable diesel production requires more feedstock per gallon of fuel produced compared to biodiesel. The hydrotreating process uses about 8.1 pounds of feedstock per gallon, while transesterification for biodiesel uses about 7.5 pounds. This difference in conversion efficiency impacts the overall economics.
- The Price of Soy Oil: The rapid expansion of renewable diesel has created immense demand for soybean oil, a demand that has fundamentally altered the entire soy complex. This has driven up the price of soybean oil, often making it the primary driver of the crush margin. As a result, renewable diesel production, fueled by this demand, has outpaced biodiesel production.
- Competition for Other Fats and Oils: While soybean oil is a major feedstock for both, renewable diesel producers are increasingly using lower-cost feedstocks like used cooking oil (UCO) and animal fats (tallow, yellow grease) to improve their margins and achieve lower carbon intensity (CI) scores, which are key for meeting regulatory requirements in markets like California. This has led to a significant increase in the price of these feedstocks as well.
The Bottom Line for Soy Farmers and Crushers
For the U.S. soybean industry, the rise of soy biodiesel is overwhelmingly a net positive. It has created a massive, new source of domestic demand for soy biodiesel, providing a crucial lifeline for the U.S. crush industry and a new source of profitability for farmers. While it creates a surplus of soybean meal that must be managed, the strong demand and higher prices for oil have provided a vital economic buffer. The shift to renewable diesel shows that soy is not just a food and feed commodity, but a key player in the transition to renewable energy.
