Renewable diesel #2 is a fuel made from biological feedstocks (plant oils, animal fats, used cooking oil) that is chemically identical to petroleum-based #2 diesel. Unlike biodiesel, which has a different molecular structure and can only be blended in limited percentages, renewable diesel meets the same ASTM D975 specification as conventional diesel. That means it works as a direct, drop-in replacement in any diesel engine, pipeline, storage tank, or fueling station without modifications.
The “#2” refers to the grade of diesel. No. 2 diesel is the standard fuel used in most trucks, heavy equipment, generators, and heating systems. When renewable diesel meets that grade’s specifications, it earns the same designation and can be sold, transported, and used interchangeably with its petroleum counterpart.
How Renewable Diesel Is Made
Renewable diesel is produced through a process called hydrotreating, which parallels the refining technology used to crack crude oil into gasoline and diesel at a petroleum refinery. Fats or oils are exposed to hydrogen at high temperatures and pressures, stripping away oxygen and breaking the molecules into hydrocarbons that are structurally the same as those found in fossil diesel.
This is fundamentally different from how biodiesel is made. Biodiesel (technically called FAME, or fatty acid methyl ester) is produced through a chemical reaction called transesterification, which converts fats and oils into esters by reacting them with an alcohol like methanol. The resulting fuel has a different chemical makeup from petroleum diesel, which is why biodiesel can only be blended at certain ratios (typically 5% to 20%) before it risks damaging engines or fuel systems not designed for it.
Because renewable diesel borrows petroleum refinery technology, it costs significantly more to produce than biodiesel. The capital investment for a hydrotreating facility is substantially higher than for a FAME production plant. Some renewable diesel facilities are actually converted petroleum refineries that have been retooled to process biological feedstocks instead of crude oil.
Why the “Drop-In” Label Matters
The practical advantage of renewable diesel #2 is that nothing in the supply chain needs to change. It meets the ASTM D975 specification for petroleum diesel in the United States and the EN 15940 standard for paraffinic diesel fuels in Europe. Fleet operators can fill their trucks with 100% renewable diesel without voiding warranties, swapping filters, or adjusting engine timing. Fuel distributors can move it through existing pipelines and store it in the same tanks they use for conventional diesel.
Biodiesel, by contrast, requires dedicated storage, separate blending infrastructure, and careful attention to blend ratios. Higher biodiesel blends can degrade rubber seals in older engines and attract moisture over time. Renewable diesel avoids all of these compatibility issues because, at the molecular level, it is diesel.
Cold Weather Performance
One area where renewable diesel often outperforms both biodiesel and conventional #2 diesel is cold weather operation. The cloud point of a fuel is the temperature at which wax crystals begin to form, potentially clogging filters and fuel lines. Standard No. 2 petroleum diesel has a cloud point ranging roughly from -18°F to +20°F depending on the refinery and region. Soybean-based biodiesel, by comparison, has a cloud point around 34°F, making it far more vulnerable to gelling in winter.
Renewable diesel can be tuned during production to achieve very low cloud points, often comparable to or better than petroleum No. 1 diesel (the “winter blend” diesel sold in colder climates). This makes it especially attractive for fleets operating in northern states or at high altitudes where fuel gelling is a real operational concern. Cold flow additives, which work reasonably well in petroleum diesel, tend to be much less effective in biodiesel, reducing its pour point by only a few degrees compared to the 16°C or more improvement they can deliver in petroleum diesel.
Emissions and Environmental Profile
Renewable diesel typically reduces lifecycle greenhouse gas emissions by 50% to 80% compared to petroleum diesel, depending on the feedstock. Fuel made from waste cooking oil or animal tallow tends to score better than fuel made from virgin soybean or canola oil, because the carbon accounting credits the use of a waste product.
At the tailpipe, renewable diesel also produces lower levels of particulate matter and other pollutants. Because it contains virtually no sulfur and no aromatics (the ring-shaped hydrocarbon molecules that contribute to soot), combustion is cleaner than conventional diesel. This is one reason it has gained traction in urban fleets, transit agencies, and ports where air quality regulations are strict.
Common Feedstocks
Renewable diesel can be made from a wide range of raw materials:
- Soybean oil is the most common feedstock in the United States.
- Used cooking oil collected from restaurants and food processors provides a waste-derived option with a lower carbon intensity score.
- Animal fats such as tallow and poultry fat from meatpacking operations.
- Canola and corn oil serve as additional crop-based sources.
- Camelina and other cover crops are emerging feedstocks that can be grown on marginal land between regular planting seasons.
The choice of feedstock affects cost, availability, and the fuel’s carbon intensity rating under state and federal programs that assign value based on lifecycle emissions.
Tax Credits and Incentives
Federal tax incentives for renewable diesel have shifted in recent years. The biodiesel and renewable diesel blender’s tax credit, which had provided $1.00 per gallon, expired for sales or uses after December 31, 2024. A smaller credit remains available for qualifying small agri-biodiesel producers through the end of 2026, worth $0.10 per gallon for the first half of 2025 and $0.20 per gallon from July 2025 through December 2026, with the requirement that the feedstock be produced or grown in the United States, Mexico, or Canada.
The new Clean Fuel Production Credit, established under the Inflation Reduction Act, is designed to replace the expired blender’s credit starting in 2025. It ties the credit amount to the fuel’s lifecycle emissions reduction rather than offering a flat per-gallon rate, which rewards lower-carbon feedstocks and production methods more heavily.
Several states also run low carbon fuel standard programs that generate tradeable credits for producers and importers of renewable diesel based on the fuel’s carbon intensity. These state-level credits can significantly affect the economics of production and pricing.
Where Renewable Diesel #2 Is Used
The largest consumers of renewable diesel are commercial trucking fleets, municipal bus systems, construction companies, and agricultural operations. Airlines are a growing market as well, since renewable diesel can be further refined into sustainable aviation fuel. Some heating oil distributors have also begun blending or replacing petroleum heating oil with renewable diesel in regions where emissions regulations apply to building heating systems.
At the pump, you may encounter renewable diesel sold as R99 (99% renewable diesel, 1% petroleum diesel) or R100 (pure renewable diesel). Because it meets the same ASTM D975 spec, some retailers sell it without any special labeling at all, blended into the regular diesel supply.