September 5, 2025
As the demand for low-carbon fuel alternatives grows, the market is expanding beyond traditional petroleum products—and with it, so is the complexity. Two of the most prominent contenders in the renewable fuels landscape are biodiesel and renewable diesel. Though they may sound similar and serve a similar purpose, they differ in terms of production, chemistry, performance, and regulatory treatment.
Production Pathways and Chemical Composition
Biodiesel is produced via transesterification, a chemical reaction involving vegetable oils or animal fats with an alcohol (usually methanol) in the presence of a catalyst. Common feedstocks include soybean oil, canola oil, used cooking oil, and tallow. Biodiesel is typically blended up to B20 (20% biodiesel, 80% petroleum diesel) in conventional diesel engines. Because biodiesel contains oxygen in its chemical structure, it is not considered identical to diesel fuel.
Renewable Diesel is produced using a hydrotreating process, similar to petroleum refining. In this process, triglycerides and fatty acids are treated with hydrogen, yielding a hydrocarbon product nearly identical to conventional diesel. Renewable diesel requires more capital-intensive infrastructure (e.g., hydroprocessing units) but produces a fuel chemically indistinguishable from petroleum diesel. Renewable Diesel is a drop-in fuel, meaning it is a hydrocarbon that mirrors the properties of ultra-low sulfur diesel (ULSD). It can be used at 100% concentration (RD100) in existing diesel engines without modifications or warranty concerns. This can simplify storage, handling, and distribution logistics.
It is important to note, while Renewable Diesel and Biodiesel are typically blended with or replaced diesel, they can also be blended with each other to reduce carbon intensity in virtually any diesel application. 50/50 blends have a lower freezing point, better lubricity, and other attributes that optimize engine performance over 100% use of Renewable Diesel.
Regulatory Compliance and Credits
Both biodiesel and renewable diesel are eligible for federal and state-level credits and incentives, but the value and treatment can differ.
- Under the Renewable Fuel Standard (RFS), both are classified as biomass-based diesel (D4) and generate Renewable Identification Numbers (RINs). However, renewable diesel generally commands a higher RIN value due to superior lifecycle GHG reductions and infrastructure compatibility Renewable Diesel brings in 1.7 RINs per gallon compared to Biodiesel at 1.5 RINs per gallon. However, EPA has proposed to reduce the ratio of RINs assigned to Renewable Diesel to 1.6 in its Set 2 Rule, which it released in June.
- In states like California, under the Low Carbon Fuel Standard (LCFS), renewable diesel often earns a lower carbon intensity (CI) score than biodiesel, translating to higher LCFS credit values.
Storage, Stability, and Cold Flow Properties
Biodiesel has a higher cloud point and can degrade over time, especially in warmer conditions. Oxidation stability and microbial growth are also common concerns in long-term storage.
Renewable Diesel, being a pure hydrocarbon, exhibits better stability and cold flow properties. It blends seamlessly with petroleum diesel and can often outperform it in cold climates when properly formulated. Renewable diesel reduces operational headaches associated with storage stability and can be a more attractive option for long-haul logistics and remote regions.
Market Dynamics
Biodiesel is well-established and easier to produce at small-to-mid scale. It’s often favored in local markets with active co-ops, agricultural interests, or distributed blending networks. The cost of production is typically lower, making it a more economical fuel.
Renewable Diesel is scaling rapidly, backed by major refiners, integrated oil companies, and investors betting on long-term carbon compliance and clean fuel standards. Global production capacity has surged in recent years, making it increasingly available for import and long-term supply contracts. Renewable diesel is increasingly positioned as the strategic choice for large-scale decarbonization initiatives and future regulatory compliance.
Final Thoughts
While biodiesel and renewable diesel both aim to reduce the carbon footprint of transportation fuels, their differences in chemistry, production methods, and performance characteristics make them suited to distinct roles within the low-carbon fuel ecosystem. Biodiesel’s simpler production process and established regional markets make it a practical solution in many local applications. However, limitations in stability, cold-weather performance, and blending thresholds can pose challenges. Renewable diesel, on the other hand, offers a chemically indistinguishable alternative to petroleum diesel, enabling seamless integration into existing infrastructure and diesel engines without modification—making it particularly well-suited for large-scale adoption and long-term carbon reduction goals.
As the energy transition accelerates and policies tighten around greenhouse gas emissions, renewable diesel appears poised to take a leading role in the renewable fuels market. Its high compatibility with current logistics, favorable regulatory treatment, and superior performance characteristics give it a competitive edge. Still, biodiesel continues to hold value in certain contexts, particularly where smaller-scale production and local feedstock availability drive its economic and environmental viability. Together, these fuels represent critical tools in the broader push toward cleaner energy, each contributing in complementary ways to the decarbonization of the transportation sector. Blending the two renewable fuels together might provide the best benefits overall.
By Tori Reese, Compliance Advisor