Biofuels and EV Charging in Carbon Credit Tussle

We have two analysts on our team from different teams actually, that are going to be able to really develop this for you because one of them is Ryan Fisher, he is our lead Charging infrastructure analyst, and the other is Jade Patterson and he is a senior associate focused on renewable fuels, and they both come at this from a very different side, but have been able to collaborate on a number of different research notes and tools on our side that it gives them a new understanding on what

that future of road transport really looks like in the longer term. Now, they're going to throw out some really interesting things around various policy incentives and credits release to be at the center of this. Now they get into some detail on different types of credit schemes, and it may be worth just quickly simplifying this for you. So there really are two main mechanisms that they get into.

One has to do with volume targets and another one has to do with carbon reductions regardless of fuel source. So let's think now about what the future of biofuels and how it interplaces with the electric vehicle industry, what that all really looks like. As a quick reminder, BNP does not provide investment or strategy advice, and we have a full disclaimer that can be found at the end of the show and now on When Energy Too to

Jade and Run. So today we're going to talk about biofuels, but it's going to be mixed in with a conversation around transportation, one of the things that biofuels is so very good for, or maybe inferior, depending upon who you're asking. In any case, we've got two of our analysts on today to really talk about how this is playing out, how biofuels is playing into the competitively potentially ev market.

And I'm joined today by Jade Hey Danna. It's good to be here with you, Thanks for having me, and also with Ryan Hey Dana will we spe here, so one of the things we actually do at our summits. And just back a little bit earlier. In February of this year, we had our Transportation Focus Summit in San Francisco, and we did end up having one of our BNF debates where we get two of our analysts on stage

to kind of argue differing points. Now we'll see how many things Jade and Ryan actually disagree with each other on today when we get into this. But Jade is more focused on the biofuel side of things and Ryan is focused on the electric vehicle side of things, So there will be some places where I'm sure you guys are looking at things through slightly different prism as we think about the transportation transition how this all plays out.

So while we get started on this topic, I'd like to first ask why are we talking about biofuels, Jade, I mean some respect, I'm asking you to explain what your role is in the business and what you research. Because when I think back to when I first got involved with bin ef to begin with, this could be either a long time or not very long ago, depending

upon who you're asking. But let's say ten plus years ago, there was a lot of conversation around wind, solar and biofuels and less on some of the other complexity around the industry, and now biofuels is very much back in the conversation. So maybe you could also explain why this is the right time for us to be having a conversation about biofuels. Yeah, thanks, Dana, that's a really great question,

and it's kind of worth noting that. Yeah, you're right, biofuels were really popular and kind of the the early two thousands up to the kind of twenty tens when they sort of started to plateau. And part of the reason that biofuels sort of dropped off the radar was a lot of the conventional biofuels that we talk about, so sanol and biodiesel, they actually need to be blended within

gasoline for ethanols case, and diesel for biodesels case. And most of those blend rates are typically for ethanol up to around ten percent due to engine performance issues of going any higher, and for biody so it's typically around five percent. So that's really sort of capped the growth of those biofuels that across the world in recent years. However, with the new growth of different types of biofuels. So one of the main ones that we've been talking about

lately is renewable diesel. In what's different about renewable diesel compared to say, biodesel, is it's chemically similar with existing diesel from crude oil. And so what that means is you don't have to blend renewable diesel like you do bio diesel. And so this allows for the market to grow beyond those blending limits of say five percent, and go up as high as one hundred percent theoretically now,

as we can kind of get into later. Probably a lot of the limitations now are around the feedstocks used to make biofuels, which rely on energy, crops and other

sources to be produced. So that's what it's been really driving that growth lately, is this kind of renaissance, this growth of new types of biofuels like renewable diesel, and we expect the capacity to really grow drastically from around four or five billion gallons per year globally for renewable diesel up to around sixteen billion gallons, So a pretty big jump in capacity expected in the next few years.

And let's start at the beginning, or at least for the biofuel itself, in terms of the feedstock, what feedstocks are really popular right now and which ones maybe are more contentious. When you talk about ethanol and biodesel, what we call the conventional fuel is those typically come from crops. So for ethanol in the US, and it's kind of worth noting that the US is the largest biofuel producer in the world. Second is Brazil, and that EU is in third, and so most of ethanol in the US

is produced from corn, around almost one hundred percent. In Brazil, a lot of that comes from sugarcane, and in the EU it's kind of an even mixed really of wheat, sugarcane, and ethanol. And when you look over to the biodies aside, the majority of those feedstocks are composed of what we call vegetable oils, so that's things like rape seed oil or canola, as well as soybean oil and palm oil, which was historically another kind of major source. So those

are the main kind of historical feedstocks. And today one of the big shifts that we're seeing with renewable diesel is it's still relying on the same feedstocks that we're used for biodiesel, so again you're vegetable oils, but it's also trying to rebrand itself as using more waste oils. So that's things like use cooking oil, animal fats from meat processing facilities, as well as things like corn oil,

which comes from making us at all. Actually, and so you see the shift of kind of renewable fuels starting to use more kind of waste oils. And that's really what I think the goal is for a lot of these projects is to leverage more waste instead of creating more energy crops, which creates land use change and that

sort of thing. And so let's say, in theory where we are using more waste products to create the bio fuels, are they considered still quite sustainable, because if we are thinking back to two thousand or even to twenty ten, the view was that they burn cleaner. I could draw a parallel here with natural gas. But because it burns cleaner, it is more sustainable. Is that still very much the view of them or are they seen as sort of a bit inferior to perhaps electrifying certain parts of the grid.

And I think this will end up taking us into the electric vehicle conversation in some respects because when you think about batteries and then the upfront emissions, but then tailpipe emissions reduce dramatically. Yeah, you make a good point there. So you know, when you burn biofuels, as you do with hydrocarbons from fossil fuels, you still have tailpipe emissions.

You can't really get away from that with biofuels. But biofuels do typically have a lower life cycle carbon emissions profile then say conventional fuel, And it really does range depending on the feedstock and depending on the process that's utilized to make that fuel. And so let's take the extremes. If you look at ethanol right made from corn, it typically has a higher carbon emissions profile than say, using

US cooking oil. And the main driver behind that is because when you look at the life cycle analysis of making corn ethanol, you have to also factor in the process of making the corn need fertilizer, you need gasoline or diesel to power your tractor to actually harvest that product, and then to make the biofuel itself converting it from corn and start into an alcohol. And so you have all these kind of process emissions that go along with that. Was with a waste oil like say use cooking oil.

Because it's a waste you don't have to account for all the upstream emissions for producing that molecule. You kind of start at the point of processing it and converting it in. So all that to say is you can see for biofuels it's typically around either like a forty percent reduction for ethanol's case, and then all the way up to an eighty percent reduction and carbon emissions for

say like a used cooking oil. And while we're still getting our feet under us, I think of biofuels and I think of Brazil, what other regions in the world are also biofuels producers in a big way? And then additionally, let's take it a step further, and what is the policy environment right now? Yeah, I mean I think that the policy environment is all over the map if we take a step back and I think about why these

biofield policies were enacted originally. Take the US for example, the reason for this biofield policy was more driven and today still is by energy security. So when you look back before the shale boom, and you know early two thousands, the US was only around the third largest producer of oil in the world and relied heavily on foreign oil from Russia and Saudi Arabia and other Middle Eastern countries.

And that was a big problem, right, you know, did a lot of tententious oil trade issues and that sort of thing which sent oil prices really made them really volatile, really, and so these biolefields policies were meant to kind of combat that concern around energy security and not really focused on reducing carbon emissions. And so I think that's one

of the big problems with the existing policy. Like say, there were new fuel standard in the US, which is the federal policy, and you have other policies now that are kind of being enacted that are helping to incentivize more carbon emissions reductions, like the California Low Carbon Fuel Standard, for example, which basically credits biofuels or any even electric vehicles to reduce carbon emissions and be rewarded for that emissions reduction rather than say just a blanket kind of

quota or mandate for a certain biofuel. Now, for a very short break, stay with us, and then just coming back to the question around other parts of the world. Is Brazil really the center of the biofuels industry? Brazil in terms of supply is second behind the US in terms of total output. All amazing good, I had it wrong. I need to associate it with my home country exactly. Yeah. So if you put the US, Brazil and EU together that there accounts for around eighty percent of biofuel supply

in the world. So those are the top three regions really that when we talk about biofuels competing with evs and being used to decarbonize, those are the markets that we're looking at. And the US and the EU particularly are with the Inflation Reduction Act and the EU with the Red three the Directive and other EU Fit for

fifty five discussions. That's really what's bringing biofuels back to the forefront to figure out how are we going to actually decarbonize our transportation sector, which I think accounts for around a quarter of global emissions, So it's a big problem. And trying to figure out where these where biofuels and where evs fit in and how they kind of work together is the big question that I think Ryan trying to help understand our biofuels posed to win in a

big way with the US Inflation Reduction Act. There's a few changes that have been made. It's mostly kind of

been an extension of existing policies. The biggest change really in terms of biofuels has actually been the addition of a sustainable aviation fuel tax credit, which basically has a higher value in terms of its dollars per gallon incentive than say a road fuel and so I think that's actually the US's way of trying to pivot biofuels away from just simply a road seal and using it more for other industries like aviation, where electrification is less of

a viable solution. So you would mention sustainable aviation fuels. And I'm thinking just generally of fuels, and we will very much come to the electric vehicle part of things in just a moment. But when we're thinking about fuels, then I think oil and gas companies. Is the biofuel space something that the oil and gas community is really gravitating toward or are these really disconnected but cooperating industries. That's a very great question, and I'd say it's sort

of a moving target. Historically, the biofuels industry and the oil and gas industry have really been at odds with one another. You know, you have the bioflowes industry that's asking the government to ramp up the quota for more biofuels, which obviously hurts the demand for oil and gas, and

so the oil companies are kind of against that. Additionally, the way the policies work, at least in the US is the refiners are the obligated parties that have to either blend biofuels or they have to buy these credits to offset not using as much biofuels to meet their obligation. And so what that means it hurts the margins, It hurts the profits for these oil and gas companies, and so historically a lot of oil and gas companies were

against the use of biofuels. However, I think that narrative has started to shift over the last let's say five years or so, and I think what's happening is actually a lot of the oil and gas companies, instead of say, buying these credits from another energy producer, have decided to just own those biofuel production facilities themselves. Valero is a great example of that. They and I think around ten

percent of ethanol production in the US. Now there are major US refiner of companies like Chevron and VP also kind of making entrances into this space. Chevron just bought Renewable Energy Group last year, which is a major diesel producer, And so you're starting to kind of see these oil companies start to invest in the biofuel space to have to buy those credits and be beholden to those swings

in credit prices and actually generate the credits themselves. So I think that's actually been the shift, the oil companies really starting to take part in the biofuel space. So, as promised, let's switch into EVS and let's give Ryan a chance to be a participant to our lovely conversation here. When we're thinking about road transport, vehicles are very much omnipresent in this debate about how we decarbonize cities and entire countries when they're looking at transport related emissions. But

biofuels certainly play an important role. As you've outlined, there are important policy incentives which do give them an edge. Where are we finding cooperation and perhaps conflict between the electric vehicle space and perhaps how these policies interplay with electric vehicles and biofuels together. Yeah, it's a really interesting one and it's great to hear kind of all Jade's

answers as well. So I'll come at this very much from the EV side, maybe not knowing much about both fuel at all, and people really want to know how do you make money out of EV charging and these carbon credits that you can create by delivering electricity to evs. And I'm like, Okay, this is a cool topic. Let's explore this a little bit further. And these credits can account for the ten percent of the revenues for some

of these public charging companies. So we started doing some research on that, and as I get further, I start to realize there's this kind of friction between biofuels and evs when you get to the subsidies and what's going on in these systems. Then Labe Jade described a little bit the funds going out there, and really what was the political aim of those funds. The one in the US, there's kind of forty billion scheme the Realable Fuel Standards a year aiming to produce biofuels. But then on a

country or even global scale. Now everything's about evs and the OEM's having evs, so setting kind of volumes of biofuels largely, to be honest, when you look at some of these schemes, seems a bit strange when really the aim should be carbon reduction, and arguably that the biggest carbon reduction can be attrieved by moving to electrics. You sort of see different regions and different ways, but the low carbon Fuel Standard is one that's now rolling out everywhere.

So what they do is they set a target for the emissions of fuels and if you're above that target, which largely gasoline and diesel are, you generate deficits, and if you're below then you generate credits. The credits so far have been heavily dominated really for maybe in the past ten years by biofuels and fuels like that. But slowly evs are obviously coming on to the market and becoming a bigger part of the fleet, and they're now like edging up to fifteen twenty percent of those credits,

so you see this issue. What that's actually done is tank the credit price in a way, because you've now got this big supply of removable diesel that Jake kind of talks about and then you've got this bigg supply of electricity credits and with that tanking the credit price, then nobody kind of wins because you might not meet your aims. So from a perspective one outside you look,

what do you actually want to do? From a political perspective, and a lot of the biofuels being Jade pointed on it that they're produced by food crops Jade called energy crops, which I don't really like the phrase, and it's the same as like renewable diesel. It gives people an aspect that this is really a good thing. But I do come to the question of how good is it. The biofuels in Europe thing it was seventy five percent of those currently made from food. The biofuels in America, you've

got corn monocropped across huge waves of the US. I think it worked out and it was nearly the whole size of the UK would be taken up just by corn that is going into this fuel. From a policy making standpoint, it does bring the question as to what really is sustainable and what isn't. But there's clearly some hard to abate sectors that might need biofuels, aviation, shipping. How do you then have this market that's available without giving it the kind of stepping stone to get there.

So I think there is some arguments so use road transport, scale some of these systems up and move. But I'm a bit pessimistic that you can actually make these fuels with waste on the scales that are really needed. Having looked at this in any kind of detail, you brought up a couple of things. But firstly, Jade, you've been challenged. So I think you sort of at this point need to defend biofuels and their sustainability credentials. Yeah, you know, I think this is a tricky one to tackle, right.

There is certainly a lot of questions around sinability of biofuels. You know, you can ask ten people what's sustinability of corn ethanol and you're gonna get ten different answers. And I think Ryan's right, like a lot of these energy crops that I call them do compete with food that actually, you know, when you get down to the nuances of it, For example, corn, a lot of it that's grown to make us and all actually isn't used for food consumption

for humans. It can produce byproducts such as different grains that can go into like animal feed, but a lot of it actually isn't specifically for human consumption. But isn't it not for human consumption because they're planting the crawl that is more valuable because of these systems to put it in a car like it could be anything that

they's planted exactly. I think that's the argument comes in that by planting this field corn or corn that is strictly just made for making fuel, you're you're disposing line that could be used for the growing corn human consumption or other crops for food. So it's really I think on the land use competition that you really have to think about what's best for society. Is it to make it for fuel or is it to grow for food?

And that's I think where the debate it's interesting. Well. Additionally, when you're bringing up the credits, I mean, one of my questions is are the I guess life cycle emissions actually brought into consideration in this sort of debate. I'm going to guess that the answer is no, and that I'm going to take us down a rabbit hole to

which we have no answer. But what I mean by this is when we think about electric vehicles taken a look, depending upon where your battery is actually made, and if it's made on a dirty grid, in theory, you have quite a bit of carbon that you essentially need to

pay off overtime by driving. You know, if you drive it a certain number of miles but you have zero tailpipe emissions, there comes a break even point, and that break even point always pays off within the lifetime of that car, so they are better from an emission standpoint.

This is research we've done. We know that. And then on the other side, you think about agricultural emissions, things coming from fertilizer and agricultural practices in many different ways, and something that we at B and F are actually looking into even more with our newest research team, which is focused on agriculture and land use. Within these kind of two other parts of the biofuels and electric vehicle

space and these other emissions. Are those being discussed more or is the focus really much further down the line when people like you and I are interacting with taking a flight or hopping in a car, I think the emissions and jade will be the expert on how they do biofuels, but they take into acout life cycle emissions and land uice and things like that to come out with a school which is basically like how many grounds

of COO to equivalent. They call it a produced per mega dule of fuel burned and they can kind of say either fuel burned or electricity that's delivered. So they have a methodology and you can argue that this will be improved over time. When you think about evs, you're right about the battery bit. They include the grid, so they're saying what you're charging with coal or are you're charging with for example, solar, and the grids that are

cleaner basically will generate more credits. Well that's done. Is good because that's pushed EV charging firms to basically sign power purchase agreements with developers because then they can prove that they're using green energy and they can get a bigger carbon saving and that means they get more credits and then get more money and the money can be big.

So in Germany we're kind of estimating you can get somewhere around forty euro cents fifty euro cents per killer what hours more than the price of electricity if you've got these ppa kind of deals and getting green credits, so that's a good incentive. I don't think they're fully baking in the battery emissions. However, if you do run them into the model, it doesn't actually make a great

deal of difference. Evs are still significantly more clean on the carbon basis than biofuels in most conceivable grid emissions, and this is not understood everywhere. Like one of the things it comes down to is that evs are about three to four times more efficient than an internal combustion

engine vehicle. For every mega jewel of energy, you'll go in like three to full times further basically, And that becomes a bit confused, I think when you start to see the calculations and people go through, and I think the policymakers have got confused at times, particularly in Europe. But I don't know whether jade obviously boo fuels. I

don't quite know how they calculate there. Yeah, I'll chime in on the biofuels side, and yeah, to your point, Danta, they do actually factor in kind of the full life cycle emissions from from producing a feedstock and making it into a fuel all the way to the tailpipe. The way it works is they measure the emissions associated with farming, like you said, the fertilizers, transportation of the feedstock to the production facility and then again to the fielding stations.

So I'll think it's accounted into it as well as the land use change that causes. So thanks to policies like California is Low Carbon Fuel Standard and basically policies that reward fuels for having a lower carbon emissions profile. What that does It tells the producer like, hey, I need to buy power purchase agreements to buy crean power to offset my emissions from the electricity use to produce this fuel. I need to buy coin that source from

a farmer who uses sustainable farming practices. So it's another big big thing is, for example, using practices like no till, which basically reduces less carbon C or two from the soil when the crops are planted. So all these different practices can actually stack up to make a pretty big

difference in terms of the fuels life cycle emissions. For example, with ethanol in California, the emissions profiles actually dropped around thirty percent over the last ten years thanks to a lot of those practices of starting to reduce the emissions from electricity and better more sustainable farming practices, and also carbon capture on a lot of these ethanol plants. So that's really driving down and sentivizing these producers to reduce

the emissions from biofuels. Now for a very short break, stay with us, So switching tracks a little bit, Let's ask the question what does the future look like for both biofuels, and then I think to set the stage for that electric vehicles, some of the real world numbers put it into perspective better than than you can kind of say based on some of our analysis in some way. So today we were debating the numbers coming out of Europe and China, and it looks like about thirty percent

of vehicle sales that are kind of bevel phead. So that gives you just like a strong sense of where this is heading. And other regions in the US maybe behind, but some of this new policy certainly going to tick them over as well. No doubt government funding is playing some level in this, but it does give you a sign of the trajectory, saying somewhere around seventy percent of sales going out to twenty thirty will probably be electric.

So then the follow up question is do we think that electric vehicles will in some way really be competitive with biofuels and eat into their market share in the future. Yes, and I think this is the biggest worry for those at the moment who are basically making lots of money off incentives to produce biofuels. Now, these carbon credit schemes are the one that I described, the LCFS olaphoria that's moving out to many states in the US. Canada is

adopting a scheme across the whole country. British Columbia already has one. In Europe, you've got two big schemes in basically Germany and the Netherlands that will give money to EV chargers. Already you can get money for biofuels as well. But those types of credit mechanisms in the red three that Jade was briefly discussing earlier, we'll have to roll out across the whole of Europe by twenty twenty five.

In theory, it's in the trialogus at the moment, sort of the negotiations between European bodies, But it looks like it's heading that way, and what that means is, obviously, if you can get more credits for evs, then it eats into the share for biofuels and the money heading that way. And what I hear when I speak to some of those Barfield people as I'm trying to like sense check what I'm looking at. If they want targets, they want to set a target because this becomes economically challenging.

When we talk about bifles, there's lots of different grades, and Jay can probably describe this. You've got renewable diesels, the biodiesels E fuels are slightly different. This is like fuels created with hydrogen and things like that. Well, some of those don't seem that anomically viable I think, without either target or some kind of money being pushed that way. So I sense that they're a little bit fearful and it becomes harder to sign off your investments if the

credit mechanisms become overtaken basically by evs. So they're definitely cautious about it. The one thing you look at these mechanisms, and has happened in other credit mechanisms before, is if you have too much supply then the price tanks and then the kind of overriding system doesn't work. So I think policy makers are also trying to figure out if we let evse fully work in these systems, does then the policy become pointless because supply exceed the man. But

there's a few things they can do. They can basically increase the target. So in California, the credit price is tanked and jays always reporting on this. So it used to be like two hundred dollars a ton. I think it's eighty dollars a ton now and there's a massive access in supply of credits and I think that's getting bigger,

and some of that renewable diesel. It's what they can do is say, well, actually we don't want, say, for example, and our renewable diesel anymore, and we want the target of emission reductions to be higher, and that then kind of set this balance. It means the credit price can stabilize. So yeah, I think there's a big story on bo fuels versus EV chalging, and this friction is kind of

only just stalling to occur. So I think as we look out into the future for biofuels, As Ryan mentioned, right, EV adoption is definitely going to be a huge part of the road transportation sector, not so much forraviation where you can't really put batteries and airplanes and hydrogen is still long ways out. But within the road field sector, I think long term out to twenty fifty, the story is pretty grim for biofields. I think it's there, especially for the ones that are need to be blended, like

ethanol and biodesel. Those are going to fall with the adoption of electric vehicles and a subsequent decline of gasoline and diesel. But we might see some places in the short term, some countries where electric vehicles are maybe too expensive or not being adopted as quickly as in the US or wealthy European countries, and so what we could see happen is actually biofields potentially grow in the short term in some of those markets to meet those targets

that have been set by the EU. So the growth of biofuels and the electro biofuels and the short term medium term is kind of going to vary from region to region. But I think the long term story is that really biofuels are not really the long term solution within the road transportation sector and have a much larger role to play in places like aviation and potentially shifting. But I mean, there's so much vested interest in these sectors.

He starts to realize that when you get involved like that steam the ruble fuel standard is not the same as like the low carbon fuel standard that we were describing. That one just literally is setting volumes of biofuels to go in and the ring thing is a benefit, right that they're adding it in. It's like it's some money going to the electric vehicle industry. But the reality is

the fundamental policy is in my opinion, flawed. So you've got like this forty billion scheme that's just plowing in biofuels, but the carbon reduction element is not there. And you see this lobby effect also happening in the EU legislation.

So I described how like the low carbon fuel standard you have in California is moving over to Europe, and in the methodology of that, they basically just totally discount the carbon savings of electric vehicles to the extent that they're sort of like thirty percent of or forty percent of the value of what we actually think is the value that they should be achieving, and that obviously favors biofuels, and you get back to this conversation you started with,

which is like where do oil and gas really sit on this? And a lot of those obviously now spending more and more money buying ev charging firms. But then at the same time that they're getting refineries, they're getting more heavily involved within what maybe was the enemy before in biofuels by getting renewable diesel refineries and things like that. And then some of the policy targets and what they're

talking don't add up. So you've got policy makers, the German Environment minister saying, we don't want to have any food crops in our biofuels. We don't want to destroy for us. This is not what we're aiming for. But then at the same time, it appears that these wastes that they want to put in biofuels are just not coming in the kind of volumes that are needed to suffice the industries. So, yeah, you've got progress, but I

think that this challenges that remain. Yeah. So yeah, I was just going to say, I mean, I think you're right Ryan in terms of how the policies differ. I think we can all agree that the low carbon fuel standard type program that basically rewards fuels or electricity for achieving a lower carbon emissions profile is much better. It's more of a technology agnostic program than the renewable fuel standard that basically mandates certain volumes and picks winners based

on who lobbies the most their fuel. So I think it is good to see more of these policies be rewarded based on the carbon intensity. So what I want to know is where is the opportunity for the biofuels industry, because surely these companies who have been established for several decades now are looking for what that next thing could be.

If maybe it's not going to be road transport growing and that brings us to sustainable aviation fuels, I think, but maybe there are even more things, So Jade, where are we seeing the growth come from in this space? That's a really good question. I think what's really exciting about what we mentioned earlier renewable diesel is the way these refineries are set up. Basically, they operate the same

way as say a crude oil refiner does. It's almost the same exact equipment, same exact process really using what's called hydro processing. So they take these fats or oils and they hydrotreat it. So they add hydrogen atoms onto these long carbon chains to make what's actually a renewable hydrocarbon. And so what's really cool about this process is you can make renewable diesel, but at the same time it

actually produces a yield of jet fuel as well. You get this mixture typically by default it's around eighty five percent diesel and fifteen percent jet fuel. But what these producers can do is they can actually optimize their system to produce even more jet fuel, so anywhere from like fifty percent or even more. We've heard if they set their system up properly to kind of refine the distal it further to make it into a jet fuel type

quality fuel. And so what's really cool is these facilities that are being built is today they might be making renewable diesel in the US, partially because it's a higher value in terms of its incentives and the actual commodity. But longer term, as Ryan mentioned, as the incentives really drop in like the LCFS program, and we start to shift our attention from road fuels more to aviation sector.

It can start to see some of these producers make less diesel and more jet fuel, which I think is probably where the fuel needs to be utilized more heavily. So in the show notes, I acknowledged a few articles and research notes that we've written about ev chargers and biofuels. So I guess my question is, do you guys see yourself collaborating on more research pieces in the future. I mean, I'm not going to claim that I created this tool, but there's a tool that calculates the deficits and credits

across these different schemes. So we've got that for California at the moment with them popping up out, So we just want to do that in every region so you can see how many credits, how many deficits, how much money can you make on which fuels are really going to win those I think that's really noige piece that we can keep collaborating. I definitely agree with Ryan despite

his technology really starting to squash mine. I think there's definitely a lot of opportunities for us to collaborate in the medium term, particularly like you mentioned with the credits balances and trying to understand where those markets are moving. I think is really really valuable for our clients as

I think about making these investments. They want to know which technologies are disrupting these markets, and so a lot of opportunity for us to work together and see how these two technologies are going to help decombonize the transportation sector. In the future, we'll see how this evolves. So, Jade Ryan, thank you very much for joining us today on Switched On. Thanks to Lusha, Thanks Sana. Today's episode of Switched On

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