Refining and reforming and Renewable diesel and SAF

Renewable diesel and SAF are made with refinery kit, hydrotreaters and hydrogen, so oil refiners make them either by co-processing fats with crude fractions or by converting whole refineries; the fuels then sell into the same diesel and jet markets.

Refining and reforming (energy) and Renewable diesel and SAF (chemical): 4 relationships.

How they are linked

1. Co-processing in refinery hydrotreaters

Physical flow · Medium · Fats and oils into refinery units

Vegetable oils and waste fats can be fed alongside fossil fractions into existing refinery hydrotreaters, which strip out oxygen with hydrogen and give a partly renewable diesel or jet fuel.

5% to 30% HEFA feedstock limit in co-processed jet fuel under the UK defence standard, raised in 2025
30,000 t a year SAF target from co-processing at Indian Oil's Panipat refinery

Co-processing needs little new capital, which is why it is the quickest way for a refiner to start making SAF. The low blend limit has held volumes back; the UK standard raised it from 5% to 30% in May 2025. Some US refiners have stopped co-processing renewable diesel, including Chevron at El Segundo and Monroe Energy at Trainer, so it is not always worthwhile.

Sources: US Energy Information Administration; GreenAir News; SAF Investor; ADS Group (bp release)

2. Refinery conversions

Joint production · Strong · Crude refineries converted to biorefineries

A refinery already has hydrotreaters, hydrogen plants, tanks, docks and permits, so turning a struggling crude refinery into a renewable diesel plant is a way to reuse those assets.

767 million gal/y Phillips 66 Rodeo renewable fuels capacity after full conversion (2025)
730 million gal/y planned full capacity of the Marathon and Neste Martinez conversion
about 0.6 billion gal/y total US renewable diesel capacity at end 2020

California's Rodeo and Martinez refineries were converted from crude to renewable fuels; Rodeo's 767 million gal/y and Martinez's planned 730 million gal/y together come to about 1.5 billion gal/y, more than twice the whole US renewable diesel capacity at the end of 2020. Rodeo can also shift about 150 million gal/y to SAF, so converted plants can swing between diesel and jet.

Sources: US Energy Information Administration; US Energy Information Administration

3. Price link: same fuel markets

Cost and price · Strong · Both ways

Renewable diesel and SAF are drop-in fuels sold against fossil diesel and jet, so their price base moves with the refined products that refineries make.

0.89 monthly change correlation
0.98 12-month change correlation
1.13 fitted elasticity

The correlation is very high because both series are dominated by fossil fuel prices. The real margin of a renewable plant also depends on fat prices and policy credits, which this price link does not capture.

Sources: Material Insights (World Bank, FRED, IMF data)

4. Blending mandates

Policy · High in India · Mandates pull refiners into SAF

SAF mandates oblige fuel suppliers, who are mostly refiners, to blend renewable jet fuel, so refineries become the natural producers.

1% by 2027, 2% by 2028 India's planned SAF blending for international flights

Indian Oil became the first Indian company certified under CORSIA to produce SAF by co-processing, at Panipat, using used cooking oil. Output depends on collecting used cooking oil from hotels, restaurants and food makers and keeping it traceable.

Sources: SAF Investor; Outlook Business

For investors

Key learnings

Refiners hold the cheapest route into renewable diesel and SAF: co-processing needs little capital and conversions reuse existing plant.
Two California conversions alone added about 1.5 billion gal/y, more than twice the 2020 US total, so renewable diesel margins now hinge on fat supply and credit prices rather than on scarce capacity.
Renewable fuel prices track fossil diesel and jet very closely, so the investment case rests on the premium paid through mandates and credits.

What to track

Renewable diesel and SAF premium over fossil diesel and jet: A shrinking premium squeezes converted refineries (Weekly · Argus, Platts, US RIN and LCFS credit prices)
Refinery conversion and co-processing announcements: More conversions add supply and compete for fats (As announced · EIA, company releases)
Used cooking oil and tallow prices: Feedstock is the largest cost for renewable fuels (Weekly · trade press)

For policymakers

Key learnings

Co-processing at existing refineries, as at Panipat, gives India a low-capital start towards its SAF targets before dedicated biorefineries are built.
Raising co-processing limits, as the UK did to 30% in 2025, is a low-cost lever that lets refiners scale SAF quickly.
Co-processed SAF in India will be limited by how much used cooking oil can be collected and certified from hotels, restaurants and food makers, more than by refinery capacity.

What to track

SAF certified output from Indian refineries: Shows progress towards the 2027 and 2028 targets (Annual · Ministry of Petroleum and Natural Gas)
Used cooking oil collected under the RUCO programme: Feedstock availability limits co-processed SAF (Annual · FSSAI)

India

Indian Oil's Panipat refinery is certified to co-process used cooking oil into SAF, targeting about 30,000 t a year, ahead of India's planned 1% SAF blend for international flights in 2027 and 2% in 2028.

Sources

U.S. renewable diesel capacity could increase due to announced and developing projects, US Energy Information Administration (2021)
U.S. biofuels production capacity growth slowed in 2024, US Energy Information Administration (2025)
UK fuel standard raises co-processing limit for HEFA feedstocks in jet fuel to 30%, GreenAir News (2025)
Indian Oil Corporation certified to produce co-processed SAF, SAF Investor (2025)
Used cooking oil to produce sustainable aviation fuel: IndianOil, Outlook Business (2025)
Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)
UK's Defence Standard for SAF updated, ADS Group (bp release) (2025)