One Major Player That May Reinvent Renewable Diesel

Renewable Energy Group (REGI) presents a way to reduce our overall carbon footprint without necessarily reinventing the wheel, and it could continue to play a big role in the future of energy. In this clip from "The High Energy Show" on Motley Fool Live, recorded on May 31, Motley Fool contributor Tyler Crowe makes the case for Renewable Energy Group, and explains how it could create renewable fuels in the future.

Tyler Crowe: I'm going to say Renewable Energy Group, which is being acquired by Chevron (CVX 1.04%). I know it sounds like you're just owning Chevron, but who cares? The idea being is that it is incredibly hard to replace the density of liquid fuels when it comes to commercial scale vehicles like 18-wheelers, jet fuel, anything that requires an immense amount of energy density in a small space. Anything in a gaseous state, hydrogen, natural gas, things like that, it's just hard to compress that much energy into that smaller space when it's in a gaseous form. Liquid fuels are going to be a thing for a long time based on the energetics of it. As a result, I want to look at things that have the ability to be a renewable fuel that we can manufacture outside of the conventional fossil fuel industry but still have that impact, and renewable energy and the idea of renewable diesel is in that realm and that's where I want to go. Now, that could mean Darling Ingredients (DAR 4.94%), Valero (VLO 0.08%), ExxonMobil (XOM 0.23%) has some ALGOL stuff that they're working on. But again, I'm just using renewable energy as the proxy for renewable fuels here. It's been a thing for a long time, we, I would say messed up going on the ethanol route back in late 2003 or '4 when they originally did that, I think it was a energy security thing out of the Iraq war where oil was super important, but the energetics of ethanol stink. You have to blend it and it can barely, based on current engines, go for more than 15%, 20%. But the thing with renewable diesel these days is that you can have a diversity of feedstocks where you can use agricultural waste versus a food stock like soybeans or corn or anything like that, and it's chemically identical to the petroleum products that we're using today. A critical component here is that we need to create something that is chemically identical to what we're using. Now, we'll say, well, how does that reduce carbon emissions? This goes back to the wood pellet thing too, where it's like we understand that we are still putting carbon emissions into the air when we do this. However, if you look at it from a full lifecycle process of growing trees, we're taking carbon out of the air, reusing it from pellets, renewable fuels we're using something that is a carbon sink in form of plants in form of algae, anything like that, taking the carbon out of the air through natural processes and reusing it. On a net basis, they're a net-zero product. Well, it's not like we're not taking things out of the air here, but it's going to be a way that we can significantly reduce our overall carbon footprint without reinventing the wheel for some of the super challenging energy problems that we have in trying to get to this future of energy situation.