Delta Air Lines’ wholly owned refinery in Trainer, Pennsylvania, will reportedly start receiving shipments of raw materials for the production of renewable fuels, Reuters learned from three sources with knowledge of the matter.
The outlet reported that the airline’s action may signal the start of a new strategy that would, “reduce its environmental liabilities by hundreds of millions of dollars.” It’s being speculated that the move by Delta suggests a tactical shift by the airline’s subsidiary company, Monroe Energy, which has historically been one of the smaller-scale oil refineries pushing the U.S. Environmental Protection Agency (EPA) and the White House to reform current legislation on biofuel.
The U.S. Renewable Fuel Standard (RFS) program, designed to gradually reduce greenhouse gas emissions and grow the nation’s renewable fuels sector, currently requires refiners to blend an ever-increasing percentage of biofuels into the country’s fuel pool each year; or, barring that, to purchase “compliance credits” from other companies that do so.
Delta purchased the Pennsylvania oil refinery a decade ago with the aim of saving on its jet fuel costs, representing the very first direct acquisition of a refinery by an airline. Since then, Monroe Energy has struggled to become profitable, leading Delta to make multiple attempts at selling it off.
However, Delta’s revenue from the refinery has skyrocketed this year as global profit margins for refining have soared, largely due to trade sanctions imposed on Russia after it invaded Ukraine—a situation that is ongoing. The Monroe Energy plant pulled in $323 million in the first half of 2022, in comparison with the $283 million loss it suffered in the first six months of 2021.
Sources said that Delta’s refinery is expecting to begin importing agricultural products like soybean oil, a feedstock used to produce a biomass-based diesel that fulfills the federal government’s requirements for blending with petroleum-based jet fuel.
Delta declined to comment on the reports, instead directing Reuters to the contents of its most recent climate lobbying report, which indicated that Monroe Energy was weighing the option of producing renewable fuels, including sustainable jet fuel, pending the completion of its own operational and financial analysis.
Without the capability to produce its own sustainable fuel and claiming that fuel-blending ability was limited, Monroe Energy has, in the past, found itself spending hundreds of millions of dollars each year to purchase compliance credits.
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