Oil major Chevron plans to invest $600 million in two soybean crushing facilities owned by U.S. agricultural commodities trader Bunge Ltd., securing future feedstock for renewable fuels, the two companies said on Sept. 2.

The investment will result in a 50/50 JV, under the memorandum of understanding the two companies said they reached.

U.S. refiners have been ramping up their production of renewable fuels, spurred by federal and state financial incentives, and are seeking to secure guaranteed access to vegetable oils, animal fat and used cooking oil, which some refiners say are already difficult to source.

Chevron would have the right of first refusal for the soybean oil crushed by Bunge, the companies said.

Refiners are eyeing partnerships with agricultural producers to source and process vegetable oils so they can produce green fuels such as renewable diesel. Oil majors want to use their existing crude refineries and avoid costly retrofits and conversions.

Chevron and Bunge's proposed JV will include expanding Bunge's facilities in Destrehan, Louisiana, and Cairo, Illinois, to nearly double their capacity by 2024. The facilities currently crush 7,000 tons of soybeans per day, which can produce roughly 330,000 to 340,000 gallons of soy-based diesel.

Vegetable oil can then be treated in refining units such as hydrotreators, which currently yield mainly diesel and jet fuel.

"Given Chevron has extensive hydroprocessing capacity, we see the possibility to produce renewable diesel or even sustainable aviation fuel in the future," Chevron downstream executive vice president Mark Nelson told Reuters.

Bunge already supplies soybean oil to Chevron, which co-processes small quantities of renewable diesel at its El Segundo, California, refinery.

Nelson said the amount of renewable diesel it will produce will be driven by market conditions but expects over time to process renewable feedstocks at its West Coast and Gulf Coast refineries.

Meanwhile, legislation is currently being considered that would make sustainable aviation fuel (SAF) more economically viable to produce at scale. SAF can be three or four times more expensive than making traditional jet fuel.

In August, Marathon Petroleum said it would build a soybean processing complex with ADM in Spiritwood, North Dakota, as part of a joint venture in which Marathon will receive exclusive access to the soybean oil.

Unlike other green fuels such as biodiesel, renewable diesel can power auto engines without being blended with diesel derived from crude oil, making it a lower-pollution option.

"In terms of the energy transition, our companies can do more working together than either of us individually," Bunge CEO Greg Heckman told Reuters.

In July, Heckman told investors that renewable fuel demand, in particular, has triggered a “structural improvement” in oilseed market and is lifting Bunge’s expectations for earnings.

Soybean oil prices have more than doubled in the past year, hampering some refiners' plans. Soybean oil is more carbon intense and thus less lucrative than processing used cooking oil and animal tallow, which are in shorter supply. Chevron and Bunge said they will explore low-carbon feedstocks and pretreatment possibilities.