The Dangerous Economist: Life is full of tradeoffs: More Renewable Diesel Might Mean Higher Food Prices

See Renewable Diesel Booms Despite Concern Over Effect on Food Prices: U.S. production of the plant- and animal-derived biofuel soars by Bob Henderson of The WSJ. Excerpts:

"Renewable diesel is made in a way similar to that for conventional, petroleum-based fuel typically powering trucks and trains, but by using plant oils and animal fats instead of crude oil. That difference can translate into a reduction in carbon emissions of up to 83%, according to the California Air Resources Board."
"Renewable diesel is made from the same stuff as another biomass-based fuel called biodiesel, which is already mixed in low concentrations into much of the nation’s diesel supplies, much the way ethanol is blended into gasoline. But renewable diesel, unlike biodiesel, is similar enough to its petroleum-based cousin to serve as a drop-in replacement."
"A drawback is that renewable diesel is expensive to make. A producer of renewable diesel who sold it in California for the same price as its conventional cousin would have lost an estimated $3.88 a gallon last year if not for government incentives averaging $4.59 a gallon, according to an S&P Global Commodity Insights model."
"The EPA is trying to balance carbon-emission goals with other concerns. The renewable- diesel industry is increasingly relying on vegetable oils for feedstocks because supplies of suitable waste-product substitutes such as used cooking oil and animal tallow are running thin. Soybean oil prices have already been driven up by demand from fuel makers, and the EPA is concerned that the renewable-diesel boom could further boost already-surging food prices.
The agency is also worried that elevated vegetable-oil prices could have other unwanted consequences such as increased palm-oil production, which is associated with deforestation."

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