Chevron, the second largest oil company in the US, is teaming up with Ag giants Bunge and Corteva on a renewable fuels project made from canola. The companies intend to plant as much as 10 million acres as winter cover crops in states across the southern US using a proprietary hybrid produced by Corteva, a leader in seed and agricultural chemicals.
While Corteva will “provide the genetics,” according to Corteva Agriscience’s Juan Carlos Rojas, a joint venture between Bunge and Chevron, “Bunge Chevron Ag Renewables,” will buy the winter canola crop from producers and use the oil to produce renewable fuel. For those not familiar, Bunge is one of the world’s biggest oilseed crushers.
The plan will be rolled out in stages, starting with growers in Tennessee and Kentucky for the 2023-24 crop year, then expanding to Mississippi, Louisiana and possibly other states in the US South. The companies say total acreage will depend on future demand but note there is the potential for 10 million acres in the region.
The new crop is intended to be used in a double-crop system following harvest of crops like corn. Rojas told DTN in an interview that the canola crop would overwinter and be harvested in early May or June. It could then be followed by soybeans or cotton.
Not only could the winter canola crop provide a new revenue stream for producers, the companies say it will increase the availability of vegetable oil feedstocks and help grow the domestic renewable fuels market. The companies add that adding a cover crop also has the potential to enhance soil health by holding more nutrients, water, and carbon in the soil.
The US is not currently a major canola grower, planting just 2.2 million acres in 2022. While that was a record, it is dwarfed by the world’s largest grower of the crop, Canada, which seeded over 21 million acres of canola last year. Canadian scientists actually developed the crop back in the 1960s to eliminate two undesirable components of rapeseed — erucic acid from oil and glucosinolates from meal.
Canola plants grow from three to five feet tall and produce pods from which seeds are harvested and crushed to create canola oil and meal. The seeds pack a punch, too, containing about 45% oil versus 18% to 22% for soybeans. Canola oil is prized for its heart-healthy properties with the least saturated fat of all common culinary oils. Canola plants are probably most recognizable by the small yellow flowers they produce, which can be a pretty spectacular site in fields stretched across the countryside.
According to the US Canola Association, the ratio of supply versus demand of canola oil in the US is about 1:4, which the group says presents a huge opportunity for producers. That supply gap could widen even further as the demand for renewable fuels grows. State programs and other government incentives reward fuel producers for “decarbonizing” by producing renewable fuels, which has motivated some of the world’s largest oil and fuel companies to dive into the space. The US Energy Department projects that renewable diesel will be about 7% of the overall diesel pool by 2030, versus just 5% currently. (Sources: Grain Central, DTN, Bloomberg, US Canola Association, US EIA)
