Phillips 66 has outlined plans to deepen its investment in renewable fuels, centered on its Rodeo Renewable Energy Complex in California and a proposed Western Gateway Pipeline to support fuel supply into the state. For investors, this is a story about capital allocation and energy transition strategy. For UCO collectors, it is a story about feedstock demand at a scale most people in the grease industry rarely think about.
What Phillips 66 is doing at Rodeo
In 2024, Phillips 66 completed a multi-year, billion-dollar conversion of its 128-year-old Rodeo refinery near San Francisco into a facility that processes exclusively renewable feedstocks. The plant no longer runs on crude oil. It runs on used cooking oil, animal fats, greases, and vegetable oils.
The facility now has the capacity to process roughly 800 million gallons per year of renewable feedstock and can produce over 50,000 barrels per day of renewable diesel, renewable gasoline, and sustainable aviation fuel. A pre-treatment unit on site allows the facility to process raw, lower-quality feedstocks like UCO and trap grease directly, rather than relying solely on pre-treated material from third parties.
Phillips 66 has described the operation as running like a traditional refinery, adjusting throughput based on feedstock cost, availability, and the price of finished product. The company sources its feedstock from global supply chains using marine terminals and rail infrastructure.
Why this matters for the UCO market
The math is straightforward. When a facility of this size operates at full capacity, it consumes enormous volumes of renewable feedstock every single day. Used cooking oil is one of the primary inputs. At 800 million gallons per year of feedstock processing capacity, Rodeo alone represents a significant share of total U.S. demand for waste oils and fats.
Phillips 66 is not the only company operating at this scale. Diamond Green Diesel, the joint venture between Valero and Darling Ingredients, runs two renewable diesel facilities on the Gulf Coast with a combined 1.2 billion gallons of annual capacity. Those plants also run heavily on UCO and animal fats. Between Rodeo, DGD, and other large-scale renewable diesel operations, the feedstock appetite of the industry is massive and growing.
This level of demand is why UCO imports from countries like China, Vietnam, and Malaysia have surged in recent months. Domestic supply alone cannot fill the gap at these volumes. But that does not mean domestic collectors are being squeezed out. It means the market is growing fast enough to absorb supply from multiple sources simultaneously.
The California factor
California remains the most valuable market in the country for low-carbon feedstock. The state's Low Carbon Fuel Standard generates compliance credits based on the carbon intensity of the fuel being produced. UCO, with one of the lowest carbon intensity scores of any feedstock, generates the most credits per gallon. That makes it the most sought-after input for any producer operating in the California market.
But California has also lost more than 300,000 barrels per day of conventional refining capacity since 2020. Phillips 66's Rodeo conversion is part of the response to that structural gap. The proposed Western Gateway Pipeline would further support fuel supply into a state with tight markets and complex regulations.
For UCO collectors operating in California, Nevada, and Arizona, this is a market where your product carries premium compliance value. Phillips 66's commitment to expanding renewable fuel production in the state only reinforces that dynamic.
The feedstock competition is intensifying
Phillips 66 is now competing for the same feedstock as every other renewable diesel and biodiesel producer in the country. That competition benefits collectors. When more refineries are running, more procurement teams are in the market, and more buyers are competing for the UCO you collect.
The company has indicated it plans to run harder-to-process feedstocks through its pre-treatment unit, which includes lower-quality UCO and trap grease. That is significant for collectors and processors who handle material that may not meet the specifications of every buyer. Phillips 66's ability to pre-treat raw feedstock on-site expands the pool of UCO that has a viable end market.
The company is also weighing additional renewable fuel projects at other U.S. refineries, which could further increase feedstock demand in the years ahead.
The bottom line
Phillips 66 has converted one of the largest refineries on the West Coast into a facility that runs exclusively on renewable feedstocks like used cooking oil. The plant processes 800 million gallons per year. It is operating at scale, producing renewable diesel and SAF for the California market, and the company is exploring further expansion.
For UCO collectors and grease processors, the takeaway is simple. The biggest players in the energy industry are now building their entire operations around the feedstock you pick up from restaurants every day. The demand is real, it is growing, and it is being backed by billions of dollars in infrastructure investment. The grease you collect has never been more valuable.
