For those of you who don't know me, I'm Prashant Rao, North American Integrated Oil and Refining Analyst here at Citi. Pleased to be joined this morning by two management team members from two different companies. Martin Parrish from Valero, and we're very pleased to have Randall Stuewe, CEO of Darling Ingredients here, who is Valero's JV partner in the Diamond Green Diesel venture. We're going to start with a brief video. Then, I'll make some opening comments, and there'll be a presentation. If we could cue the video.
Valero offers two alternative fuels, corn-based ethanol and renewable diesel, out of the Diamond Green Diesel joint venture we have with Darling Ingredients.
They spent a couple of years getting the project together, and on June 30, 2013, Diamond Green Diesel produced its first gallon of renewable diesel.
Diamond Green is really a refining unit, basically hydrotreating and isomerization. We've brought a lot of excellence to that. We're leaning on the refinery to operate it.
What's most interesting is the greenhouse gas savings that we have. Renewable diesel produces 15% of the greenhouse gases that a mineral diesel would produce.
Renewable diesel, it's kind of a wide-open game there. If you're trying to meet a low-carbon mandate, we think renewable diesel is the best fuel out there. Renewable diesel is definitely different than biodiesel. What renewable diesel is, basically take waste products. We're taking beef tallow, used cooking oil.
Products that would otherwise be put into landfills.
We make diesel fuel out of it.
It has a high cetane number, which is kind of like the octane in gasoline, which means it's kind of what gives you the get up and go in your car.
In the United States, diesel is a fuel used for transportation of goods, trucking, and commerce.
It's a really exciting time to be at Diamond Green Diesel. It was recently approved that by 2022, we'll be producing 675 million gallons a year. We'll be more than doubling our capacity.
We're going to be close to 50,000 bpd . That's going to put us at the second-largest renewable diesel producer in the world.
What is interesting about Diamond Green Diesel is that we actually plug into the existing infrastructure that the industry uses already. You do not have to build a special pipeline system for us. You do not have to modify your engines. You do not have to have new fueling stations. We are complementary to what is already being produced and sold, not only in the United States, but throughout the world.
Hopefully, that gives you a little intro into what we are going to talk about today. Before I turn it over for the presentation, I just wanted to point out that we are particularly excited to have Darling as the largest global independent processor of animal products in the U.S. That is what makes this, from our perspective, makes this a very interesting venture and something that is sort of cutting edge for the U.S. I also wanted to point out that this will be a technical presentation. This is a great opportunity to walk through some of the operational and broad market aspects of the renewables business. Many of us are familiar with Valero's basics of refining and optimization. This presentation will be very much in that vein.
We are going to limit our Q&A and our discussion to really as an opportunity to dive into that on the technical and operational aspects of the enterprise. With that, I will turn it over to our guests, and then I will follow with a little Q&A.
Okay. Well, thank you, Prashant. I am Martin, just in the video there. I want to thank Randall Stuewe for showing up with me. We have had this JV since 2011. It has been a really good partnership. We are having a good time with this renewable diesel and it is all good. With that, I am going to jump into the first slide. This is just the safe harbor provisions I want to make you aware of. We are going to make some forward-looking statements today, and it is important to note that actual results could differ materially from those projected in such forward-looking statements. Okay. Diamond Green Diesel, just a little bit of the timeline. Randy is going to talk about Darling here in a second. I will give you a little background on Valero. The final investment decision on the first train was made in February 2011.
As you just saw in the video, we started up the last day of June in 2013, and we are soon running at 160 million gallons a year. We approved an expansion in late 2016 on that first train. That expansion came online in August of 2018, we are now producing at 275 million gallons a year. In November of this past year, both the Darling Board and the Valero Board approved a second independent train at 400 million gallons a year. We will be at the 675 million gallons a year in late 2021 with startup. That will place us as the second-largest renewable diesel producer in the world. Most of you have seen this before. It is Valero's footprint, 15 refineries, 3.1 MMbpd of processing capacity. Most of that in the Gulf Coast, but scattered throughout the U.S. and Quebec and Wales.
We also are the second-largest ethanol producer in the United States. We have 14 ethanol plants in the Midwest, 1.73 billion gallons a year. What we are here to talk about today, though, is Diamond Green, and that is the Diamond down there by New Orleans. This plant is adjacent to our St. Charles Refinery, Valero's St. Charles Refinery. There are a lot of advantages in that that I will talk about later. We come in by rail with the feedstock. Also some truck feedstock in. We can go out by rail, we can go out by barge, we can go out by vessel. Just excellent logistics being located next to the refinery, and that has given us a big advantage. With that, I will turn it over to Randy.
Thanks, Martin. It is a pleasure to be in front of you today. It is the first time Martin and I have actually been together on stage. It is a real honor to finally get to tell the value of the integration to the oil side, the energy side. This is a really significant developing story for the Darling shareholders. We are listed on the New York Stock Exchange. We have been around for 135 years. We date back to the origins of the meat packing industry in the United States. We were the original Swift meat packing family. Mr. Swift and Mr. Darling formed the company back in 1882. We find ourselves today now as operating on five continents with a supply chain of around 200 - 215 facilities, transforming about 10% of the world's slaughtered animal byproducts into basically food, feed, and fuel to feed a growing population.
The thesis of the business is pretty simple. As wealth is created, you tend to live better and eat better. In that eating better, you tend to put protein into your diet. You will continue to see more and more animals produced in the world to do that. When we look back at the joint venture and the formation of the Valero relationship, Darling was looking for a way to transform animal fats and used cooking oil into something other than animal feed. If you rewind the movie back to 2010, about 100% of our production went in as a calorie into animal feed, and it priced against the value solely of the commodity corn as a calorie.
We wanted to own the arbitrage between feed and fuel, we needed to find a right way to do it, and we needed to find a product that the world wanted. Martin will talk more about why this fuel is so much different than biodiesel. Biodiesel has been around for years and years. As I always tell people, you can all be two things in life today. You can be an honorary renderer. If you have put bacon or sausage or hamburger in a skillet, what have you done? You have browned it, got the moisture off, and you separated the fat from the protein. We do that on an industrial scale, about 10 million tons. Then if you want to make biodiesel, you go buy a bottle of vegetable oil at the store.
You dump out about 10% of it, put a little alcohol in it, shake it up, and let it sit there. Now, the slimy stuff on top is the glycerin, the rest is the methyl ester. That is the difference. This becomes a true hydrocarbon by definition. Animal fats, much as if you put them into a refrigerator today, what happens? They get cold and hard. So in biodiesel, you chemically, molecularly do not change the product, so in cold climates, biodiesel made from animal fat does not work. So you can only blend it at a small percentage. Whereas making it into renewable diesel creates a very, very positive fuel with a nice cold flow property. Martin can tell you more.
As we looked at the world today, used cooking oil, we will talk predominantly North America in this presentation as we operate on the one facility in St. Charles. The value of that location, as Martin said, is it has multiple rail lines, can receive product by water, can ship product out by pipeline, boat, vessel, and rail car also. Darling's system in North America is about 130 locations. People say, "What makes it so valuable to the system?" There are about 200,000 customers that support that aggregation system that then supplies Diamond Green Diesel. If you think today at 275 million gallons with about 8.5 lbs a gallon, you got about, what is that? Almost 2.8 billion pounds, 2.7 billion pounds of fat out of a 14-billion-pound North American fat market.
Diamond Green today runs about 1/3 corn oil, 1/3 cooking oil, and 1/3 animal fats today. The value of the relationship is the ability to bring down those fats. When we get down to the expansion of 675 million gallons, you are about 6 billion pounds. Roughly one out of every 2.5 lbs produced in North America will end up in 1 sq mi in the United States being made into renewable diesel. As you can see on the chart there, most of the used cooking oil goes into the facility today. Only about half of our animal fats today go down there until we expand on out. It is very simple. This is a real simple chart that shows, as I said, the rendering process and the used cooking oil side.
Basically, you're just in the sense purifying it. You're picking up french fry oil, not too glamorous, and then you're grinding up bones and guts and separating the fat from the protein. But there's a lot of control points, and this is one of those things in that this is a process that's been around for a lot of years. It's pretty much a steel and cast iron stainless process whereby it's very acidic products that are made, and then it's shipped out and shipped down to Diamond Green to be further processed. The movement today that you're seeing, Diamond Green was originally founded as a play against the Renewable Fuel Standard under the Energy Independence and Security Act in 2007. When we looked for the site and we chose the St. Charles site, it's because it had outbound pipeline transportation.
We built what I'd call the lowest cost inbound logistics against the Darling supply chain, against the lowest cost outbound logistics of being on the pipeline. What you've seen now, and Martin will comment more about that, is the development of the low carbon markets. That is just not a U.S. or a California program. It's a global program with 66 countries now having mandates. They give preferential treatment to what gets called, I hate to use the word, waste fats and greases. Used cooking oil, inedible corn oil, and used cooking oil animal fats. The portfolio of products between the 14 ethanol plants and the distillers' corn oil out of there, and the 136 locations that Darling operates, creates an incredible supply chain of vertical integration of the lowest cost inbound into one of the lowest cost and largest facilities in the world.
Okay. Thank you, Randy. Randy mentioned carbon intensity, and we talk about carbon intensity because that's what drives the value today for Diamond Green's product. That's where the green diesel gets to be green money. If you look at the carbon intensity scale on there, you have gasoline, diesel, and California grid electricity. They're all about 100 gCO₂e/MJ. If you look and take vegetable oil, this would be a soybean oil, a canola oil, and you run that through biodiesel or renewable diesel, you'll have a score of about 55 gCO₂e/MJ. If you take what we call waste feedstocks, you would get somewhere between a 10 gCO₂e/MJ and a 30 gCO₂e/MJ. Randy just showed we run somewhere between 20 gCO₂e/MJ and 30 gCO₂e/MJ in our feedstocks to Diamond Green. So that's the value proposition. I'll get a little bit more into that. What are the units on this?
This is just a measure of CO₂ equivalent emissions on a life cycle basis per unit of energy. The actual units are grams of CO₂ equivalent per megajoule, if you care to know that, but it's all relative to this 100 of gasoline and diesel. The lower the carbon intensity, the more value you can get for that molecule. The higher the carbon intensity, the less valuable it is. California with the LCFS, they have a program. It's just straight math. Pretty easy to figure out. Canada's the same. EU program's a little more difficult. It's the Renewable Energy Directive. Now the RED, Renewable Energy Directive, RED, the acronym. RED II that goes out to 2030 now, is still based on carbon intensity, but there's single credits and double credits, and it's a little more difficult.
The other thing that makes the EU difficult is you have to meet the EU standard, but you can choose to exceed the EU standard. Just as an example, at $200 a ton carbon price, which the market now is around $187, and a 25 CI renewable diesel. The carbon value alone is $1.79 per gallon in 2019. That gives you an idea of what we're talking about here. Next slide is just how do you make renewable diesel. We get the feedstocks from Darling. The majority of our feedstocks come from Darling on the left-hand side. The other input to the process is hydrogen from the St. Charles Refinery on the right-hand side. First, we go to the pretreatment unit. We remove calcium and other metals there before we go to the deoxygenation reactor.
We remove the oxygen that's in the fat at the deoxygenation with the hydrogen. The product out of that is water, so we separate out the water. Then we go on to an isomerization process. That's where you control the cold flow properties. That's where you differentiate from biodiesel, so we can actually control the cold flow properties, the pour point, the cloud point. We go on to product separation. The light ends and the propane go to St. Charles Refinery for further processing. Today, we don't segregate out the renewable naphtha that goes to St. Charles. When we have the new unit up and running, we will segregate out the renewable naphtha. We'll be selling that into the gasoline markets throughout the world. Then obviously, we have the renewable diesel. We have a big advantage here.
If you try to do a renewable diesel plant and you're not co-located with a refinery, you're talking about a lot more capital. I talked about the hydrogen we get from next door. Obviously, we buy it, but it was still there. It's incremental hydrogen versus base load. Steam goes back and forth from our plant to the refinery. We rely on the refinery for wastewater treating, and we rely on the refinery for light ends processing. Some huge synergistic value by being next to a refinery. Just a little photo of what we got, just to set the stage. The St. Charles Refinery, over 200,000 bpd refinery is to the lower left of this drawing. In the middle, the actual photograph is the existing unit, and then the 3D model on the right is the new unit.
On the existing unit, you can see the rail car slots coming in. The green tanks are the feed tanks and then intermediate tanks, other ones. The covered building there is the pretreatment, and then at the bottom of the drawing is the Ecofining unit that we licensed from UOP Technology. That's where all the deoxygenation, isomerization, separation take place. What's nice about the—n ow, I'll talk about the second unit that we call Super Diamond or Diamond Green Diesel II, 400 million gallons a year. Same setup. A fully independent train, essentially grassroots construction. We won't have to take downtime on the existing unit.
You can see the tanks, the larger pretreatment there, the Ecofining unit in the bottom right. There is also between the pretreatment and the Ecofining unit, that little block there is the naphtha tower that we are putting in to separate the naphtha, and then we will pipe it over to St. Charles for storage and then shipment out. You all have seen this slide before in our IR deck. Just going over the economics a little bit of Super Diamond or DGD2. $1.1 billion investment, including the naphtha tower. We expect to fund that from cash flow from existing operations. We will talk about the rest of the things later. I will just skip to the bottom line here. The estimated EBITDA is $500 million a year for the total venture, and that is based on our historic average EBITDA of $1.26 per gallon.
What kind of drives the value here, and what are the mandates like? Randy talked about this briefly. First and foremost for us, you have California, the state there. We are talking about California with the Low Carbon Fuel Standard. That was in place since 2007. When they enacted it took a while to get it up and running. They just recently adopted regulations to extend the LCFS from 2020 - 2030. If you looked at 2018, the carbon reduction target was 5%. It is going to be a 7.5% reduction target for 2020 and a 20% reduction target for 2030. If you think about 5% last year to 20% in 2030, that is a fourfold increase in the target. On the national front, you have the Renewable Fuel Standard that has been in place for several years now.
Renewable diesel fits under that standard as a biomass-based diesel fuel, so the mandate is 2.1 billion gallons a year in the United States. This generates a D4 RIN, renewable diesel does. Globally, Randy mentioned the 66 countries that have some sort of programs. If you look what is most similar to California, the British Columbia program is very similar to California. The European Union, which is the RED II now, is similar where the low carbon is valued. The United Kingdom is still in the EU now, but when Brexit eventually happens, they will have a low carbon program also. That is really what we concentrate on. I mentioned earlier that the European Union, you have to meet the RED II, but you can choose to exceed it. Sweden has chosen to greatly exceed it. They are already at a 19.3% greenhouse gas reduction with a 21% target for 2020.
These are some real numbers from California, fresh off the press. These were just posted last day of April. We have renewable diesel consumption on the left and biodiesel on the right. You can see renewable diesel in California for 2018 is already 10.2% of the diesel fuel mix in California. They are blending in an R10.2 right now. That is 25,000 bpd or 380 million gallons a year. Also note the sharp increase from 2015 through 2018 of renewable diesel consumption. Basically, as the molecule comes on stream, as the production comes on, it gets blended in California. Conversely, the biodiesel on the right-hand side, it is 12,000 bpd , 180 million gallons a year, and 4.9%, so they are blending at a B4.9 in California, and pretty flat over the last few years. This is interesting too. This is the CARB credits by fuel type.
If you have a carbon intensity less than the target value, you generate a credit. Renewable diesel generates a credit, biodiesel generates a credit, ethanol generates a credit. If you have a carbon intensity higher than the target, you generate a deficit. Gasoline generates a deficit, diesel fuel generates a deficit. This is only the credits. What is interesting in 2018, if you sum up the four quarters there, 3.5 million metric tons of credits were generated by renewable diesel. Ethanol generated 3.5 million metric tons of credits. Biodiesel generated 1.6 million metric tons. These are by far the three largest carbon generators in California. What is interesting is look at the increase in renewable diesel, what the credit generation has been doing there.
The projection is for the next several years, really for the foreseeable future, renewable diesel will be the largest carbon generator in California. If we take that one step forward, this is another interesting chart. I am going to spend a little time here because it is a little complicated. First, the blue line on the top, if you looked at the left side axis that goes to the left side, that is the credit bank. In the early days, there was more credits than deficits, so a credit bank built up to almost 10 million metric tons. It stayed flat for several years, and now it has been declining as the deficits have increased. If you look at the carbon price, which is the green line, that goes to the right-hand scale.
If you notice that period in fourth quarter 2017, first quarter of 2018, the carbon bank started being drawn down, and look what happened. The carbon price went up. Makes sense, supply and demand. The bars go to the left-hand scale. This is quarter-by-quarter data from the first quarter of 2014. The credits in million metric tons in blue, the deficits in yellow. You can see initially the credits were outpacing the deficits. That is because the carbon reduction target was only 1%, so everybody was blending E10. They were putting some biodiesel in the fuel, so they exceeded the mandate, so credits built up. Now as you keep moving, the target is moving now. Now you have to have a 5% reduction in 2018. You can see in 2018, three of the four quarters, the deficits exceeded the credits.
That is why the carbon price is going up. What is nice to see in the fourth quarter of 2018, it was actually even. There was enough renewable diesel being consumed, enough biodiesel, enough ethanol to bridge the gap. Now fast-forward, in 2022 instead of a 5% reduction, it is a 10% reduction, so those blue bars, or excuse me, the yellow bars get doubled, assuming the same amount of consumption of gasoline and diesel. In 2030, the yellow bars are four times what they are in 2018. That is why we are optimistic about the future for this fuel, as renewable diesel should be the largest carbon generator out there for the foreseeable future. Okay. I believe this is the last slide. We have also started publishing a renewable diesel margin indicator. You can see the formula there.
What goes into it is the NYMEX ULSD price, the biodiesel RIN that is generated when you produce this fuel, so that is the D4 RIN, the Low Carbon Fuel Standard number in dollars per metric ton of CO₂ equivalent, and then the Chicago soybean oil price. We have a rolling last 12 months here. This is average gross margin indicator of $1.68 a gallon. Now, if you look at May 2019, we have enough days in the month that the value for May of 2019 is $1.65 a gallon. So we are sitting right on the long-term average. You can see not a whole lot of variability there.
Thank you, Martin. We have a little time. I have a few questions. I guess I will start with first principles, feedstock market, and what drives pricing there. Maybe for those of us who do not know that as well, maybe we could do something like soybean oil as an example to walk through what drives pricing and how those dynamics work.
Okay. No, I think to understand feedstock, you have got to start all the way at the top. There is either food oils that can be consumed, that are edible, and then there is inedible oils. For the most part, the animal fat and used cooking oil and distillers' corn oil are inedible oils. Around the world, you can look at that you would consider edible oils would be plant-based, would be palm oil, soybean oil, rapeseed oil, corn oil from the high fructose industry, sunflower oil. You have got those. Very few of that product ends up in fuels today, with the exception of palm oil predominantly out of the Pan Asian countries. There are some pretty significant mandates there for biodiesel production now.
Now you are back to inedible oils, and inedible oils come from either from the slaughterhouse industry or the mortalities or the food service industry today. Obviously by the chart, the U.S. being a very significant meat producer, along with Europe, followed a little bit there by South America today. But at the end of the day, those inedible oils have either a chemical use. So you are thinking a chemical would be some of your cleaner animal fats that come off of a fresh slaughterhouse. Then you got about 1 billion pounds, believe it or not, that still is used in food today. There are still some fryers in the Pennsylvania area that make some wonderful chips and pretzels and stuff with it, and I think the Outback blooming onion is still fried in it, so.
The world moved away from animal fats in about 1989, as McDonald's stopped frying french fries in them. More and more animal fat then came on the market. The slaughter in the U.S. between poultry, pork, and red meat or beef production grew. Today there's roughly in the animal fat complex, about 9 billion pounds of fat made in the United States. A billion pounds goes to make the different oleochemicals for the cosmetic industry, and some of the plastics industry. It competes against palm oil. A billion pounds fries stuff in the food service industry. The other 7 billion basically ends up in either biodiesel, renewable diesel, or into animal feed today. At prices, if you think of the world, everything's a measure of heat, either a calorie or a BTU.
The feedstock market, and the reason that we went into this wanting to own the arbitrage was, if you think about it, the only thing it could price against was a bushel of corn. Someone says, "Well, corn, yeah." When you're feeding an animal, what are you trying to do? You're trying to make that animal gain weight as quick as you can and as cheap as you can. Then it can go to slaughter and be monetized. If you think about it in just the simplest form, animal fats take a very small portion of steer's stomach to give you a high energy level to put weight on that animal. So it priced against corn. At the end of the day, the price of corn moves up and down. We saw in the 2008- 2011, we had multi-hemispheric droughts.
Corn went up to $8 a bushel, and now as of yesterday, it's back down to about $3.50 a bushel. The farmer, as we say in the world, is really the only true economic barometer because if the price moves up, he produces more. If the price moves down,
He produces less. At the end of the day, the world produces a lot of corn to feed animals, and it trades as a calorie. You say, "What's the price?" This is your question, On the price of a bushel of corn, divide by 56. 56 pounds in a bushel times 3.2 is the energy content, and that's what that's worth. So that drives our pricing. Before the LCFS, as in the Renewable Fuel Standard, it would never move up above much more than the price of corn or the price of palm oil. That was a regulator. Now, given the carbon intensity, you can make an academic argument that used cooking oil, because of its carbon score, and animal fats, because of its carbon score, can actually be a premium to soybean oil and palm oil.
The feedstock markets are very limited in the U.S. At the end of the day, 7 million tons, including a couple million tons of distillers' corn oil, that is basically North America with Canada in it. Then probably about half of that in Europe today. As people start to think about a major expansion into feedstock plays for renewable diesel, it is going to be feedstock limited around the world.
That kind of leads me to my follow-up question. It was on the constraints on feedstock availability, sourcing. If we think about this as sort of coming from a refining angle, that is obviously the name of the game, is you cut into the refinery through the gate, and there is an analogy here as well. Maybe in the evolution of Darling's business, and the DGD JV. Can you give us examples of some challenges in terms of as you develop this, the constraints and availability of sourcing? Or maybe we could ask it another way, a constraint or a challenge that a new entrant would have, maybe, and scaling of that might be a more interesting way to think about it.
I think there is a couple great stories here. As I said early on in my comments today, when we started up at the 160 rate, that is about 10% or 11% of the feedstock produced in the U.S.
Right.
That is quite a big number when you start to think of it being transported about 90%, 95% by railcar. It was reliant on the Kansas City Southern Railway. You get this pipeline. The pipeline supply chain for this facility is roughly about 60 days. Any scheduled turnarounds, we had lots of flooding. Trying to keep the air bubble, if you will, out of the IV line to the patient here has always been the challenge. As we get larger and larger here, we will now have with the Norco or St. Charles facility, is just probably the most ultimate logistical paradise you could ever think of having because you are on the Mississippi River. You got docks. You can bring in barges. You can bring in ships. You have the Canadian, the CN Railroad, and the KCS coming in there.
You have an ability to unload trucks. That would be both inbound and outbound. The logistics are unbelievable for the facility. At the end of the day, the size of this unit and keeping it fed, and of course, always as we do CapEx and build out plants, we never seem to put enough storage in them, both inbound and outbound. That is just the normal challenge, is I tell people, Darling has got the major supply chain into this. If you are going to go out and build a facility, you are going to have to go cut a deal with JBS, Tyson, or Cargill to sell you all their fat. Otherwise, it is virtually impossible to aggregate enough to make one of these worth the capital to put it in the ground. It is just too difficult. I think they showed me the bill the other day.
I do not know, I think I got 800 railcars now supporting it, so it is a real machine.
If you drill down a little bit on that G&P aspect of the gathering and processing, how long could it take to scale up a network like that? Or asked another way, how many years ahead are you for somebody coming in? Because we start to worry about the flip side of the equation, that as the incentive is there, we expect new entrants to enter.
Absolutely, and I will let Martin take a shot at it, too. I think, at the end of the day, Renewable Energy Group operates a whole series of biodiesel plants and then the Geismar facility, and they are able to aggregate a pretty good amount of animal fat into there. So you can do it. At the end of the day, it is just going to end up being competition for feedstock. I always joke we have been at it 137 years, so I hope it takes somebody a little while to do this. The other piece that Martin really touched on, but kind of probably flew everybody's head, that covered building in the picture was the pretreatment facility. The secret sauce that I would say two or three of us in the world know today is the aggregation of feedstock by quality.
Really, at the end of the day, the database that we've created out there of our facilities and other people's facilities, you say, well, what do you know that other people don't know?" The amount of metal in the feedstock. Metal comes in animal fats, believe it or not. It comes from eating the grass, the animal feeds. Why is metal or alkaline metals an issue here? Because it kills the catalyst. It's just that simple. So knowing the secret sauce, anybody can go out and buy a railcar of animal fat tomorrow. But is it going to be the right blend? I think at the end of the day, I always call it our chemistry sat down there is pretty sophisticated today.
Over the years of learnings that we've made, the commercial team that aggregates feedstock down there buys a specific blend in order to make it work right for both yield and quality.
What I would add is you also have a little bit of, as the world population grows, as the world wealth grows, protein in the diet increases. That's more animals. That's more tallow worldwide. We're seeing already used cooking oil collection used to be pretty slim in the Asian countries. Now it's really taking off. Corn oil, in edible corn oil in the United States. There was none when Super Diamond started up. Now there's 3.5 billion pounds a year that people are extracting from ethanol plants. So what you're also going to see is there's certainly a lot of growth in this waste collection, waste feedstock collection going on and generation. So in that regard, that's helpful.
It's not waste, Martin.
I know.
It's liquid gold. You cannot call it waste.
Okay. Yes. I'm going to have to reprogram my banks here.
Oh, you touched upon this in the answer to that question, Martin, and sort of segues into when we look at the balance, the supply, demand balance of that credit bank. Maybe I'll cut straight to the chase. That gap looks like it's going to grow again. How much growth do we need from the supply side to close that? We threw a lot of numbers out here, but maybe if you could boil that all down.
Well, I will. If you look, if we just fast-forward, I think the easiest way for me to look at it is you go out to 2030, assuming we stay on that projection. That is a 20% reduction. If you do the math, that is blending at about an R28. Round it off and say it R30 ID California. If we are doing 25,000 barrels a day at R10, that is 75,000 barrels a day at R30. Is there anything that stops renewable diesel from getting there? No, I don't think so. I think it will get there a lot quicker than 2030 because we have enough production coming online throughout the world. Now it just depends on whether it makes it to California or it stays in other places in the world, too. You also have Canada, British Columbia, they are going the same route as Canada.
That demand is pretty small now. There is also the talk of a nationwide LCFS in Canada. If that occurs, the Canadian demand is larger than the California demand, so there goes you another 75,000 bpd-100,000 pdf of this product. Europe, demand is growing there. Washington and Oregon, they are about 40% of California demand. Oregon has already got an LCFS in place. Washington has rejected it a few times, but it is right on the goal line again, and we expect that to happen. It looks like there is going to be plenty of demand.
It is interesting, Prashant, because you kind of say, why renewable diesel? Why are we having this narrative, this discussion? Clearly, no matter what your opinion is of climate change on how and why, the number one source that can be dealt with today on greenhouse gas or carbon emissions is tailpipes. This stuff is drop-in ready, cleans up the tailpipes dramatically. Is it a long-term play? I think it is here for quite a few years. What diminishes the play? Electrification over time.
Yeah.
Hopefully I will be a lot older by then. This is the intermediate play that the world is making, and it is the number one and easiest solution to clean up air quality.
Yeah. The other thing great about renewable diesel, regardless of the electrification of passenger vehicle. That is on a pretty slow right now, but there is electrification of the big trucks that consume the diesel fuel. That is way down the road.
Right.
We can also shift over to renewable jet. That market is going to be here a long time.
Any part of the barrel, as long as the economics makes sense, right?
Right.
I think we're out of time. I want to thank you very much.
Thank you.
Thank you, Randy. Thank you, Martin. Thank you, all.