Phillips 66's renewable fuels refinery in Rodeo, California, plans to start producing renewable jet fuel by the first quarter of next year and is now running higher carbon intensity (CI) feedstocks to produce renewable diesel (RD).
"We're currently running off higher CI feedstocks for the plant as we prepare for the production tax credit next year," Phillips 66's executive vice president of marketing and commercial Brian Mandell said on an earnings call today, referring to the Inflation Reduction Act's (IRA) 45Z tax credit. He said it was not likely renewable jet fuel would be produced before year-end.
The plant successfully produced sustainable aviation fuel (SAF) in September, chief executive Mark Lashier said on the call. "We will fully intend to be a supplier of sustainable aviation fuel to the marketplace," he said.
The company's renewable fuels business logged a $116mn loss in the third quarter compared to a profit of $22mn in the same three months of 2023, according to earnings released today.
Still, Phillips 66 thinks renewable refining margins have room to widen "into the fourth quarter and beyond," Mandell said.
Low feedstock prices, limited imports to the US, a tight fossil diesel market on the west coast and "stronger" credit markets will widen RD margins, according to Mandell.
