New Biofuels Talent Strategies Amid Renewable Diesel Market Evolution

Recent conferences, including the AFOA in Nashville and the Argus Biofuels Conference in London, have highlighted significant challenges and transformations within the renewable fuels market. 

Regulatory changes, market pressures, and evolving environmental policies are also reshaping the talent landscape, compelling industry players to adapt their strategies - as Louis Stevens and Alex Coghlan of HC Group's Agriculture and Nutrition talent practice, explain.

Market Opportunities and Uncertainty

The renewable diesel market is currently facing a paradox: rapid production growth has resulted in an oversupply that is squeezing profitability. Large-scale producers with strong financial backing can weather this storm, while smaller players struggle to remain afloat. Looking ahead, upcoming regulatory changes are expected to further reshape the market. In January 2025, the Clean Fuel Production Tax Credit (45Z) will replace the existing Biomass-based Diesel Blender's Tax Credit. This transition is anticipated to reduce imports and provide some relief from the current oversupply.

However, it introduces uncertainty as companies will need time to adapt to the new tax incentives. California’s renewable fuel policies remain particularly noteworthy, expressing skepticism toward certain feedstocks like soy-based renewable diesel, which could add additional regulatory hurdles for U.S. producers.

The uncertainty ahead of the new year along with squeezed margin pressures has led to stalling contract negotiations, leading some plants to operate below capacity. Smaller players could face particularly tough conditions in the first quarter of 2025, especially those reliant on expensive feedstocks like soybean oil. In contrast, larger integrated producers with greater financial flexibility are better positioned, as they can utilize production for compliance purposes rather than purchasing costly carbon credits.

Upbeat Sentiment

The sentiment at the Argus Biofuels Conference was notably more optimistic for the European biofuels trading industry. After a challenging 2023 and first half of 2024, marked by a surge of cheap advanced biodiesel imports flooding the market, recent legislative changes—such as tariffs on Chinese biofuels imports by the EU and regulations preventing ticket carry-overs into 2025 and 2026 in Germany—have revitalised trading activity.

This has prompted a noticeable increase in investment fund entrants into the biodiesel industry, reflecting a renewed confidence in the market. While short-term challenges persist, the long-term outlook for renewable diesel is promising. 

Global sustainability mandates and rising biofuel demand position the sector for future growth. Large producers capable of navigating the current volatility are likely to capture significant market share, even as many operate at reduced capacities—around 50 to 65 percent—not significantly lower than the 75 percent average for 2024. Innovation and adaptability will be key, with many companies repurposing existing facilities to meet shifting market demands.

Evolving Talent Requirements

The evolving biofuels market is also reshaping talent acquisition needs in several critical ways. Professionals with robust networks in feedstock origination, particularly those skilled in tallow and efficiency-focused crop production, remain in high demand. Furthermore, talent experienced in navigating heavily regulated markets will be well equipped to adapt to the regulatory landscape shifts expected in 2025, positioning companies for quicker and more effective starts. 

Additionally, engineers with the capability to modify and repurpose production facilities, ensuring operational resilience and avoiding issues like catalyst burnouts, are increasingly sought after as operational efficiency grows in importance. Investor confidence in the sector remains strong, with new entrants such as SquarePoint Commodities and Galaxy Energy Group signaling ongoing capital investment.

In Europe, stricter sustainability mandates and continued investment in renewable fuels bode well for the sector’s long-term growth. In conclusion, while the renewable diesel market faces short-term difficulties, its alignment with global sustainability goals and long-term growth potential is evident. 

Regulatory shifts, strategic adjustments, and a focus on talent acquisition will be critical for companies looking to navigate the complexities of this evolving industry. The outlook remains positive for those able to adapt effectively.