Phillips 66 on Jan. 31 released fourth quarter financial results, reporting improved earnings for its renewable fuels segment on higher margins for its Rodeo complex in California and stronger international results.
The company currently produces renewable fuels at its Rodeo Renewable Energy Complex, a biorefinery project that commenced development in mid-2022 and reached full processing rates during the second quarter of 2024. The facility began producing sustainable aviation fuel (SAF) in September 2024.
Phillips 66 reported that its renewable fuel segment achieved $28 million in earnings for the fourth quarter of 2024, a significant improvement over the $116 million loss reported for the proceeding three-month period. Adjusted EBITDA for renewable fuels was $50 million, up from a $92 million loss during the third quarter.
Brian Mandell, executive vice president of marketing and commercial at Phillips 66, said the Rodeo facility processed higher carbon intensity (CI) feedstocks during the fourth quarter as it ran off less valuable feedstock prior to the expiration of the blenders tax credit and implementation of the 45Z clean fuel production credit. Because the facility was running higher CI feedstock, Mandell said the company did not produce SAF during the quarter.
According to Mandell, Phillips 66 currently expects continued weakness in renewable diesel margins moving forward. He cited regulatory uncertainty as a primary factor keeping the market on a “somewhat weak footing,” and stressed the industry needs clarity on several factors affecting renewable margins, including tax credits, Renewable Fuel Standard blending obligations, California Low Carbon Fuel Standard rules, tariffs, and small refinery exemptions (SREs).
Mandell also noted the Rodeo facility produced SAF in January and is expected to produce the fuel in February. “If you look at renewable jet versus [renewable diesel] right now, it's a pretty tight market,” he said. “But we continue to use our linear program out of refineries to determine what we should make, what makes the most sense in terms of netback or value in the market. So we'll continue to do that going forward.”
