Are Green Refineries a Viable Option for Future Fuel Production?

Paul MilnerJune 29, 2021

Since the beginning of the 1900s, the United States has relied on fossil fuels – like petroleum, natural gas and coal – more than on any other energy source. In 2020 alone, fossil fuels accounted for 79 percent of the energy consumed. The reasons for our dependence on fossil fuels, not only nationally, but globally, are clear to see. Fossil fuels are cheap to produce, abundant and reliable, and ultimately, have all the infrastructure in place to make production relatively easy.

Looking past these pros, however, it is becoming more apparent that they are largely outweighed by cons. Both the production and use of these fossil fuels contribute heavily to climate change through air and water pollution, habitat destruction and dangerous mining disasters. 

Additionally, fossil fuels are nonrenewable, so when they run out in the currently-projected 50 to 100 years, they will be gone for good. The sooner we invest in the infrastructure for generating renewable energy, such as wind and solar, and build green refineries for cleaner fuel production, the better off future generations will be.

What is a green refinery?

Green refineries, also known as bio-refineries, are built with the purpose of transforming raw biomass into liquid fuel. The process repurposes materials like vegetable oils, animal fats, crops, or algae into “biofuels” such as ethanol and biodiesel that replace traditional petroleum-based fuels.

Ethanol is a plant-based fuel created through the natural process of fermentation. In this process, non-food biomass is metabolized by microorganisms to create a renewable fuel that can be mixed with traditional gasoline and significantly cut down on harmful emissions.

Biodiesel is another renewable liquid fuel that is produced by mixing repurposed materials, such as animal fats and vegetable oils, with alcohol. The petroleum diesel alternative is used to power compression-ignition engines in the same way, but with the benefit of turning something that would otherwise be discarded, like restaurant grease, into an energy source.

A newer development that is being tested today by Exxonmobil and Porsche is synthetic fuel, or eFuel. This eco-friendly fuel is being developed in southern Chile as part of the Haru Oni project, and is made by combining hydrogen with carbon dioxide captured from the atmosphere. The refinery takes advantage of the location’s windy conditions to power the separation of water into hydrogen and oxygen. From there, the captured CO2 is combined with the hydrogen to produce synthetic methanol.

As more automakers move forward with the electrification of future car models, it’s important to remember all the internal-combustion vehicles already on the road. eFuels are a perfect complement to EV implementation, as they create the opportunity to use what we already have in a smarter, greener way.

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What are the benefits of using a green facility?

As with any new technology or product, a thorough cost-benefit analysis must be done to see if it is truly worth pursuing. Though eFuels aren’t one of the biggest players in the game as of yet, the results and various benefits of their use are already gaining interest around the world.

Zero emissions

The most evident benefit of producing green, fuel alternatives is the major cutback on CO2 emissions. With transportation being the biggest contributor of greenhouse gas emissions, a combination of electric vehicle implementation and using carbon-neutral eFuels would make a monumental difference. In California, biodiesel use was responsible for the majority of the state’s greenhouse gas reductions within the transport sector, showing the promising results it could have if globally adopted.

Easy implementation

Compared to strategies for producing other renewable energies, biofuels don’t require nearly as many changes in equipment, both for oil refineries and for ICE vehicles. Oil companies can repurpose current infrastructure for eFuel production, while major fleets can get away with keeping their ICE vehicles around longer and with zero guilt.

Steady prices

Unlike fossil-fuels, eFuels produced from biomass do not experience the same volatility in pricing. Traditional fuels are far more dependent on oil prices, making it hard for companies to forecast transportation expenses in regard to fuel consumption. Additionally, biofuel production is already being subsidized in many countries, helping to keep production costs down and stable.

Increasing availability

As interest in the cleaner alternative is piqued, the availability of bio-based fuel is growing. The California Air Resources Board estimates that biodiesel production has grown from 16 million gallons in 2011 to nearly 1 billion gallons in 2020, with even more growth to be expected. Fuel producers like Marathon in California and Repsol in Spain are announcing multimillion-dollar plans to build new synthetic-fuel plants, or repurpose current petroleum refineries for eFuel production.

Investment opportunity

Such as with the Haru Oni plant in Chile, there is a great opportunity to build green refineries in desert areas that have consistently windy conditions and little to no current infrastructure. Though it will require major investment to build one of these refineries from the ground up, the area’s population will reap tremendous benefits and take advantage of their optimal location.

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What are the challenges of green refineries?

Despite so many benefits to replacing carbon-intensive, petroleum-based fuels, there are still challenges and roadblocks ahead that will slow the adoption of biofuels. 

Public acceptance

When introducing anything new, a change in attitude and understanding of how this product can improve our lives is crucial for public acceptance. Additionally, biofuel needs to be seen as a viable solution for the world’s urgent climate problems. This attitude change, however, needs to come from political figures, research authorities and oil giants. Without the cooperation from these parties, investment into and development of these refineries will never happen on a large scale. 

Production Costs

As eFuels are still in early development stages, their prices don’t nearly compete with those of fossil-based fuels. According to the eFuel Alliance trade group, eFuels can be up to six times as expensive to produce as other traditional liquid fuels. It will likely take many years before eFuel prices can compete with regular fuels.

No short term benefits

As it stands, it is unlikely that governments will want to invest millions into projects that will not have any payback for many years to come. With insufficient research and infrastructure to support an immediate switch to biofuels, the road to replacing traditional fuels with green alternatives will definitely be a long one. 

Utilimarc Blog - Green Refineries, Alternative Fuels, Alternative Fuel Production, Clean Energy

What does this mean for fleets?

In theory, the development of eFuels can be a huge opportunity for fleets of vehicles, aircrafts and even ships. Fleet managers are exploring various alternatives to their current practices, and there can be great potential if biofuels are integrated into their climate change strategies. The advent of these fuels will be especially beneficial to fleets who are not ready to get rid of their ICE vehicles entirely, or who cannot yet make the investment to replace their entire fleet with EVs. 

Ultimately, the road to zero emissions will not have a one-size-fits-all solution, and it will require changes in several different areas. Introducing yet another sustainable option for companies looking to cut down on greenhouse gas emissions, in addition to the many other established alternatives, can help to make significant strides overall. While biofuels might not be the answer to the problem as a whole, it will likely be one of the crucial pieces in solving the puzzle.

If you’re interested in learning more about how alternative fuels and data management could help you reach your upcoming sustainability commitments, schedule a demo of our platform with a member of our analytics team.


Paul Milner

Senior Analyst

Paul Milner is a senior analyst at Utilimarc. He studied mathematics and philosophy at the University of St. Thomas in Minnesota. Working at Utilimarc for nearly ten years, he helps find the stories and solve problems within complex data sets. See more from Paul


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