Flexibility and Timing of Incentives: Navigating the Fuel Transition in Refinery Production

As the energy sector transitions to cleaner fuels, refineries must navigate strategic decisions regarding production focus. This project investigates the trade-offs between refineries specialized in renewable diesel and those with flexible production capabilities for both renewable diesel and sustainable aviation fuel (SAF). Using technical data from an industry report, we conduct a scenario analysis to assess the implications of different price paths on refinery decision-making. The analysis includes simulations of various scenarios, such as shifts in policy support for SAF and reduced demand for renewable diesel due to fleet electrification. By evaluating these scenarios, we estimate the optimal production strategies for refineries, offering valuable insights into how they can adapt to changing market dynamics and policy environments.