4.2

Million Metric Tons

of greenhouse gas emissions were avoided by REGI's biofuels

700

Million Gallons

of bio-based diesel sold in 2019

37%

Expansion

in REGI’s production capacity since 2016

View Our Analysis

The Path to Drawdown: Synthetic Fuels in Zero-Carbon Transportation

A big part of reaching a zero-emission economy consists of decarbonizing the transportation sector. While electric vehicles have rightfully commanded the public attention, some segments of transportation can’t be easily electrified, like freight and delivery trucks, trains, buses, boats, as well as heavy-duty farm, construction, and military vehicles.

Radically reducing carbon emissions from these types of vehicles would mean switching from predominantly burning fossil fuels to other types of low-emission fuels. Biodiesel is among the most promising candidates for drastically cutting emissions.

Diesel fuel is the common term for the distillate fuel oil, and it’s often refined from crude oil at petroleum refineries. Biodiesel, on the other hand, is obtained from biomass like vegetable oil or animal fats. Common types of oil that’s used to make biodiesel are rapeseed oil and soybean oil.

To reach net zero emissions by 2050, the IEA projects (p. 107) a mild increase in conventional and advanced biodiesel:

  • <::marker> 1.5 exajoules in 2020
  • <::marker> 5.82 exajoules in 2050
  • <::marker> This means CAGR of 4.53% between 2020 and 2050

What We Want to See Improve

Stop Selling Petroleum-Based Fuels

REGI transports and sells (p. 29) petroleum-based heating oil and diesel as a way of diversifying their fuel products for a broader customer base. Petroleum-based diesel accounted for 19.5% and 13.5% (p. 30) of total gallons of fuel sold in 2019 and 2020, respectively. We understand the strategy of product diversification, but selling petroleum-based fuels limits the amount of carbon emissions that REGI helps offset. We want to see REGI abandon these fuels.

Set Clear Emissions Reduction Targets

REGI’s direct and indirect GHG emissions have increased by a significant amount in recent years, growing annually by 60.34% between 2017 and 2020. We appreciate that REGI installed wind turbines (p. 14) to provide renewable electricity to one of their facilities, but this is far from systematic. We would desperately like to see REGI set clear commitments to reduce absolute emissions within a concrete timeframe.

Diversify Hydrogen Suppliers

REGI notes (p. 18) that their Geismar, Louisiana facility relies on one supplier to provide hydrogen necessary to execute the renewable diesel production process. Any disruption to the hydrogen supply during production from this supplier would hit REGI’s facility hard. Especially in light of the planned expansion, we urge them to diversify their supplier base for the facility.

Related Biofuel Stocks in the Climate Index

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Allocated Company Description

0.21%

Renewable Energy Group (REGI)

REGI converts natural fats, oils, greases and sugars into lower carbon intensity biofuels. Biofuels are an important bridge to a zero-carbon future

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