The Shifting Landscape of Refining: Embracing Renewable Feedstocks

The global refining industry, long anchored to crude oil, is undergoing a fundamental transformation. As governments tighten emissions regulations and consumers demand lower-carbon products, refiners are increasingly turning to renewable feedstocks as a viable complement—and in some cases, an alternative—to fossil-derived inputs. These feedstocks, drawn from biological sources and waste streams, offer a pathway to decarbonize transportation fuels, chemicals, and materials without requiring a complete overhaul of existing infrastructure. The momentum behind this shift is being driven by a confluence of factors: policy incentives such as the European Union’s Renewable Energy Directive and the U.S. Renewable Fuel Standard, technological breakthroughs in catalysis and biotechnology, and a growing recognition that the energy transition must extend beyond electricity generation into hard-to-abate sectors like heavy transport and industry.

This article explores the most significant emerging trends in renewable feedstocks for refining processes, the innovations that are making them commercially viable, and the challenges that remain before they can achieve widespread adoption. Understanding these developments is critical for industry stakeholders, investors, and policymakers aiming to navigate the complex path toward a more sustainable refining sector.

Understanding Renewable Feedstocks: Types and Characteristics

Renewable feedstocks encompass a wide range of organic materials that can be converted into fuels, chemicals, and energy through various refining processes. The most prominent categories include:

Biomass and Agricultural Residues

Lignocellulosic biomass—such as corn stover, wheat straw, forestry residues, and dedicated energy crops like switchgrass and miscanthus—is abundant and relatively low-cost. These materials consist primarily of cellulose, hemicellulose, and lignin, which can be broken down into sugars and aromatic compounds through thermochemical or biochemical conversion. However, their high oxygen content and structural complexity require advanced pretreatment and catalytic upgrading steps.

Algae and Aquatic Biomass

Microalgae and macroalgae (seaweeds) have gained attention for their high lipid yields per acre and rapid growth rates. Algae can produce oils suitable for hydrotreating into renewable diesel and sustainable aviation fuel (SAF), while the residual biomass can be converted into biogas or biochar. Commercial-scale algae-to-fuel projects remain limited due to cultivation and harvesting costs, but ongoing research in strain engineering and photobioreactor design continues to improve economic viability.

Waste Oils and Fats

Used cooking oil (UCO), animal fats, and tall oil (a byproduct of paper pulping) are already widely used as feedstocks for hydroprocessed esters and fatty acids (HEFA) to produce renewable diesel and SAF. These waste-based feedstocks have a low carbon intensity because they do not require dedicated land use or additional agricultural inputs. However, supply is constrained, leading to competition among fuel producers and upward pressure on prices.

Municipal Solid Waste and Biogenic Residues

Organic fractions of municipal solid waste, including food scraps, garden waste, and sewage sludge, represent a large untapped resource. Advanced gasification and pyrolysis technologies can convert these materials into synthesis gas (syngas) and bio-oil, which can then be upgraded into fuels and chemicals. This approach simultaneously addresses waste management and energy production, aligning with circular economy principles.

Green Hydrogen and Power-to-X

While not a carbon-based feedstock, green hydrogen produced via electrolysis using renewable electricity is emerging as a critical input for refining. It can be used to remove sulfur from bio-oils, to lower the carbon intensity of existing hydrotreating units, and as a building block for synthetic fuels (e-fuels) when combined with captured CO₂. The cost of green hydrogen is falling rapidly, making it a key enabler for decarbonizing refinery operations.

According to the International Energy Agency (IEA), global renewable feedstock consumption in refineries is expected to triple by 2030, driven primarily by mandates for advanced biofuels and SAF.

Several interconnected trends are accelerating the integration of renewable feedstocks into conventional and dedicated refining processes. These trends reflect both market forces and technological advances.

Bio-Based Feedstocks: From First-Generation to Advanced Sources

First-generation biofuels, made from food crops like corn and sugarcane, have faced criticism for competing with food production and causing indirect land-use change. As a result, the industry is pivoting toward second-generation (lignocellulosic) and third-generation (algal) feedstocks that do not compete with food supply. Advanced biofuel mandates—such as the U.S. EPA’s Renewable Fuel Standard cellulosic biofuel requirement and the European Union’s ReFuelEU Aviation regulation—are specifically targeting these feedstocks. Companies like Gevo, LanzaTech, and Velocys are commercializing pathways that use agricultural residues and municipal waste to produce drop-in fuels that are chemically identical to their fossil counterparts.

At the same time, the development of biomass pretreatment technologies—such as steam explosion, acid hydrolysis, and ionic liquid dissolution—is improving the efficiency of sugar release from lignocellulose, enabling higher yields and lower costs. The National Renewable Energy Laboratory (NREL) has been at the forefront of characterizing feedstock variability and developing conversion models that help optimise process economics.

Algae as a Scalable Resource: Progress and Remaining Hurdles

Algae have long been hailed as a promising feedstock due to their high oil content (up to 60% of dry weight in some strains) and ability to grow in non-arable land and brackish water. Recent advances include the development of genetically engineered strains that accumulate more lipids and tolerate higher CO₂ concentrations, as well as improved harvesting methods such as flocculation and centrifugation that reduce energy consumption. Moreover, companies are adopting a “whole algae” biorefinery model where the protein-rich residue is sold as animal feed, improving overall economics.

Nevertheless, the cost of algal biomass production remains a barrier. Current estimates place the cost at $300–$400 per dry ton, compared to $30–$80 for corn stover. Research initiatives like the U.S. Department of Energy’s Algae Biomass Program have set ambitious cost targets of $85 per dry ton by 2030, which would make algal feedstocks competitive with waste oils for many applications.

Waste-to-Value Technologies: Transforming Trash into Treasure

The concept of converting waste into valuable feedstocks is gaining traction as advanced sorting and pre-treatment technologies mature. Anaerobic digestion of food waste produces biogas (methane) that can be upgraded to renewable natural gas (RNG) or reformed into hydrogen. Gasification can turn mixed waste streams into syngas, which can then be converted into methanol, ethanol, or synthetic hydrocarbons via Fischer-Tropsch synthesis. Companies like Fulcrum BioEnergy and Enerkem are operating commercial-scale plants that produce SAF and methanol from municipal solid waste, respectively.

One emerging trend is the co-processing of waste-derived bio-oils in existing petroleum refineries. By feeding a small percentage (typically 5–20%) of bio-crude or lipid-based feedstock into a fluid catalytic cracker (FCC) or hydrotreater, refiners can produce a partially renewable product without major capital investment. This approach offers a low-risk entry point for integrating renewables and has been adopted by firms like Repsol, Neste, and Valero.

Green Hydrogen and Electrification of Refinery Processes

The production of green hydrogen is a cornerstone of many refinery decarbonisation strategies. Traditionally, refineries use hydrogen from steam methane reforming (SMR) of natural gas, which emits CO₂. Replacing this with electrolytic hydrogen from renewables can cut the carbon footprint of hydroprocessing operations by 50–90%, depending on the electricity source. Green hydrogen is also essential for the second step of producing e-fuels: combining it with captured CO₂ to form synthesis gas for hydrocarbon production.

Projects such as the Hydrogen Forward Coalition in the U.S. and the European Clean Hydrogen Alliance are promoting the scale-up of electrolyzer manufacturing capacity, aiming to reduce installed costs from ~$1,000/kW today to below $500/kW by 2030. As renewable electricity generation grows, green hydrogen is expected to become cost-competitive with grey hydrogen within this decade, with significant implications for refinery economics.

Innovations in Refining Technologies for Renewable Feedstocks

The successful use of renewable feedstocks depends not only on the raw materials themselves but also on the technologies that transform them into market-ready products. Recent innovations span both dedicated biorefineries and integrated co-processing solutions within existing petroleum refineries.

Biorefineries: Integrated Platforms for Maximum Value Extraction

A modern biorefinery is analogous to a petroleum refinery: it fractionates biomass into multiple product streams, maximizing economic returns. For example, the “lignin-first” biorefinery model isolates high-purity lignin (a polymer that can be converted into bioplastics, adhesives, and carbon fiber) while using the carbohydrate fraction for fermentation into ethanol or butanol. The U.S. Department of Energy (DOE) has funded several pilot-scale integrated biorefineries that demonstrate the feasibility of producing cellulosic ethanol, renewable diesel, and bio-based chemicals from a single feedstock.

Advances in enzyme cocktails—developed by companies like Novozymes and DuPont—have improved the saccharification efficiency of lignocellulosic biomass, reducing enzyme loading costs by more than 50% over the past decade. Meanwhile, consolidated bioprocessing (CBP) combines enzyme production, hydrolysis, and fermentation in a single organism, a concept that is being pursued in academic and start-up labs to further lower capital and operating costs.

Catalytic Upgrading: Tailoring Bio-Oils into Drop-In Fuels

Crude bio-oil produced from fast pyrolysis contains high levels of oxygen (up to 40%), making it corrosive, thermally unstable, and immiscible with petroleum fractions. Catalytic upgrading—through hydrodeoxygenation (HDO), cracking, and esterification—is essential to remove oxygen and adjust the carbon chain length. Recent progress includes the development of bimetallic and metal phosphide catalysts that achieve higher selectivity and longer lifetimes than traditional sulfided NiMo or CoMo catalysts. Researchers at the Argonne National Laboratory have demonstrated catalysts that can upgrade bio-oil to jet-range hydrocarbons in a single step, reducing process complexity.

Another promising approach is the use of zeolite catalysts in fluid catalytic cracking (FCC) units to co-process bio-oil with vacuum gas oil. Optimizing the catalyst formulation and operating conditions allows refiners to maintain high yields of gasoline and propylene while incorporating renewable carbon. Companies such as Johnson Matthey and Haldor Topsoe are commercializing proprietary catalysts for this application.

Hydrotreating Enhancements and Co-Processing Strategies

Hydrotreating—the process of removing sulfur, nitrogen, and oxygen from hydrocarbon streams using hydrogen—is a workhorse unit in refineries. When processing renewable feedstocks like vegetable oils and animal fats, the HEFA (hydroprocessed esters and fatty acids) process has become the dominant technology for producing renewable diesel. Recent improvements include the use of dual-stage reactors to separate hydrodeoxygenation from isomerisation, allowing refiners to adjust the cold-flow properties of the product for winter-grade diesel. Companies like Neste and Diamond Green Diesel have achieved yields of over 90% (by weight) from waste oils.

Co-processing in existing hydrotreaters—blending up to 20% renewable feedstock with petroleum-derived gas oil—offers a low-capital pathway to produce partially renewable diesel. Several refiners have reported no major operational issues when using UCO or palm oil hydrodeoxygenate blends. However, the feedstock must be thoroughly pre-treated to remove free fatty acids, metals, and phosphorus, which can poison catalysts. Pre-treatment technologies such as bleaching earth filtration and guard-bed reactors are being refined to address these challenges.

Fermentation and Syngas-Based Pathways

Biochemical conversion routes, including fermentation of sugars to ethanol, have been commercial since the early 2000s. However, newer pathways are enabling the production of longer-chain hydrocarbons. For instance, companies like LanzaTech use gas fermentation to convert syngas (from gasified waste or biomass) into ethanol, 2,3-butanediol, and even isopropanol. The ethanol can then be dehydrated to ethylene and oligomerised into jet and diesel fuels. Similarly, the “alcohol-to-jet” (ATJ) process developed by Gevo and Honeywell UOP converts isobutanol or ethanol into synthetic paraffinic kerosene (SPK) that meets ASTM D7566 certification for SAF use at up to 50% blend in conventional jet fuel.

Thermochemical pathways such as Fischer-Tropsch (FT) synthesis are also being scaled. The combination of biomass gasification with FT catalysts produces synthetic crude oil that can be further hydroprocessed. The challenge lies in the economy of scale: FT plants typically require large capital expenditure and consistent feedstock supply to be economically viable. Modular designs, such as those developed by Velocys and Sasol, aim to reduce cost and risk by deploying smaller units that can be aggregated.

Overcoming Challenges: Cost, Scalability, and Policy Support

Despite the rapid progress, the widespread adoption of renewable feedstocks in refining faces several formidable obstacles that must be addressed through continued research, investment, and policy action.

Feedstock Cost and Supply Volatility

The cost of renewable feedstocks remains a primary barrier. Waste oils and fats are already priced at a premium due to high demand, often trading above petroleum diesel on an energy-equivalent basis. Agricultural residues are cheaper but require costly collection, densification, and transportation. Algae and cellulosic biomass have not yet reached the price points needed for large-scale deployment. Supply chain logistics—especially seasonality of crop residues and geographical dispersion—add further complexity. Developing regional hub models, where multiple feedstock sources are aggregated and pre-treated at a central location, could help stabilise supply and reduce costs.

Technological Scalability and Process Integration

Many conversion technologies that work well at pilot scale encounter challenges when scaled up 100-fold. Heat and mass transfer limitations, catalyst deactivation due to impurities, and equipment fouling are common problems. For instance, gasifiers that handle heterogeneous feedstocks like municipal solid waste often experience slagging and tar formation. Integrated biorefineries face the additional difficulty of balancing product yields across multiple process steps. Collaboration between academia, national labs, and industry is essential to de-risk scale-up. Initiatives like the DOE’s Bioenergy Technologies Office (BETO) are funding demonstration-scale projects to validate techno-economic models.

Regulatory and Policy Uncertainty

Policy frameworks are critical for creating stable markets for renewable refinery products. While the EU’s RED II and the US RFS have provided long-term demand signals, frequent modifications and political debates create uncertainty for investors. The sustainability criteria for feedstocks (e.g., land-use change, biodiversity impact) are also becoming more stringent, potentially limiting the use of certain sources like palm oil. Carbon pricing mechanisms, low-carbon fuel standards (e.g., California’s LCFS), and grand challenges such as the 1.5°C pathway are all shaping the policy landscape. Industry groups advocate for technology-neutral policies that reward all forms of carbon reduction, including co-processing and electrification.

Future Outlook and Strategic Implications

The trajectory for renewable feedstocks in refining is unmistakably upward. Analysts at BloombergNEF project that global renewable diesel capacity could reach 70 billion liters per year by 2030, up from about 15 billion liters in 2023, while SAF demand is expected to grow even faster due to corporate offtake agreements and government mandates. This growth will be supported by falling costs of green hydrogen and advanced catalysts, improved biochemical conversion technologies, and a maturing supply chain for waste and residue feedstocks.

Refiners that proactively invest in flexibility—the ability to switch between fossil and renewable feedstocks—will be best positioned to manage carbon compliance costs and capture emerging market incentives. For example, a refinery that can co-process 10% waste oil today while retaining the ability to scale up to 30% as green hydrogen becomes available will have a clear competitive advantage. Strategic partnerships with feedstock suppliers, technology licensors, and offtakers (especially airlines) are becoming essential to secure capital and offtake agreements.

Moreover, the circularity dimension cannot be overlooked: as renewable feedstocks become more prevalent, the refining industry will increasingly depend on advanced recycling and carbon capture technologies to close the carbon loop. The use of captured CO₂ to produce synthetic methane or methanol—via power-to-gas or power-to-liquids—could eventually make refineries net exporters of low-carbon fuels.

In conclusion, the transition toward renewable feedstocks is not a marginal trend but a core strategic pivot for the global refining industry. While challenges related to cost, scalability, and policy coherence remain, the convergence of technological innovation, regulatory pressure, and market demand is creating a compelling case for accelerated adoption. The companies, governments, and research institutions that engage decisively with these emerging trends today will be the architects of the low-carbon refineries of tomorrow.