Why are feedstocks such a critical risk factor in renewable diesel projects?

Feedstocks determine both the cost base and eligibility for credits. Misaligned sourcing strategies can erode margins even when production is efficient.

Can imported feedstocks still be used under current U.S. policies?

Many imported feedstocks, such as used cooking oil, now face restrictions under policies like 45Z. Domestic or North American sourcing often provides superior credit opportunities.

How do ILUC-free credits impact renewable diesel economics?

ILUC-free credits can significantly enhance revenue streams, but they require verified traceability and careful selection of feedstock origins.

What strategies exist to mitigate feedstock price volatility?

Flexible contracts, diversified portfolios, and credit stacking models are key tools to manage volatility and maintain margin stability.

How can co-processing support long-term margin resilience?

Co-processing allows incremental CI improvements while leveraging existing refining infrastructure, creating a cost-effective bridge to higher-volume renewable diesel production.

Renewable Diesel & Feedstock Strategy

Renewable diesel has evolved from a niche decarbonization tool to a cornerstone of low-carbon fuel strategy. Yet, its success hinges not on refining capacity or offtake agreements alone, but on the availability, quality, and compliance of feedstocks that drive production economics.

At Trident, we advise institutional investors and corporate leaders navigating this complex landscape — where policy mandates, sustainability standards, and volatile commodity markets intersect. Our expertise lies in designing resilient feedstock portfolios, optimizing credit structures, and safeguarding returns across shifting regulatory and market conditions.

Feedstocks as the Core
Driver of Returns

While production assets are capital-intensive, it is feedstock risk that ultimately determines margin stability. Global competition for low-CI materials, shifting import eligibility rules, and regional policy divergence mean that even well-structured projects can face unexpected compression in returns.

Key challenges shaping today’s decisions:

Feedstock Scarcity
Demand from renewable diesel, SAF, and co-processing projects is outpacing supply, especially for low-carbon lipids such as used cooking oil (UCO) and tallow.
Policy-Linked Eligibility
Under frameworks like 45Z, LCFS, and OBBBA, imported feedstocks face increasing restrictions, while domestic sourcing can unlock additional credits.
Carbon Intensity (CI) Pressure
Improving CI scores through traceable, verifiable supply chains is becoming a prerequisite for premium credits and long-term offtake security.
Regional Competition
EU mandates such as RED III and ReFuelEU are reshaping global trade flows, creating opportunities for arbitrage — and risks for misalignment.

Building Resilient Feedstock Strategies

A sophisticated feedstock strategy goes beyond simple procurement. It requires holistic alignment across origination, contracting, credit optimization, and capital deployment.

Origination & Supply Design

Mapping global and regional supply landscapes to identify sustainable, ILUC-free sources.
Structuring agreements that provide long-term security while maintaining flexibility.
Balancing domestic vs. imported feedstocks under evolving policy regimes.

Example Insight: Under 45Z guidance, imported UCO is excluded from credit eligibility — a factor that directly influences contract structures and siting decisions.

CI Improvement Pathways

Deploying CI reduction strategies that move beyond compliance into competitive advantage.
Incorporating traceability technologies for supply chain verification.
Modeling scenarios to achieve LCFS premium credits and future-proof compliance.

ILUC-Free & Advanced Credits

Navigating indirect land-use change (ILUC) considerations to capture advanced credit categories.
Structuring feedstock portfolios to maximize stacking of LCFS, RIN, and OBBBA-aligned credits.
Stress-testing revenue under credit price volatility and policy sunset timelines.

Emerging Pathways &
Feedstock Optionality

Renewable diesel is not static — feedstock innovation continues to evolve. Trident advises clients on forward-looking pathways that add strategic flexibility to portfolios.

Synthetic Lipids & Alternative Oils

Evaluating potential of microbial and synthetic lipid production at commercial scale.
Assessing readiness levels, cost curves, and compatibility with existing hydroprocessing assets.

Co-Processing Strategies

Integrating renewable feedstocks into conventional refining streams.
Optimizing co-processing ratios to balance CI improvement with operational efficiency.

Waste-to-Lipid Innovations

Tracking advancements in waste-to-lipid technologies and their potential role in diversifying future supply.
Aligning early-stage investments with policy-driven market signals.

Margin Resilience in a
Volatile Market

Margins in renewable diesel are increasingly policy-driven and feedstock-dependent. Without proactive planning, even high-capex facilities can face sudden erosion in profitability.

Scenario Stress Testing

We apply advanced modeling to assess:

Feedstock price volatility under different demand growth curves.
CI scoring changes from policy revisions.
Credit value swings due to regional market oversupply or under-delivery.

These scenarios help investors plan margin buffers and capital structures resilient enough to withstand downside shocks.

Margin Shielding Strategies

Incorporating escalators and flexible contract terms to absorb volatility.
Using credit stacking as a hedge against feedstock cost increases.
Designing diversified portfolios with multiple feedstock classes and geographies.

Aligning Capital Structures with Feedstock Risk

Capital deployment must reflect the unique risk profile of feedstocks. We help investors and corporates design structures that are resilient and adaptive.

Structural Element	Strategic Purpose
Linked Credit Structures	Match financing to credit generation and policy cycles
Portfolio Diversification	Hedge against regional or policy-driven disruptions
Reserves & Contingency Capital	Protect against feedstock supply shocks
Flexible Contracts	Enable rapid response to price or eligibility shifts.

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Trident Renewables