Energy giant Chevron announced today an agreement to acquire Renewable Energy Group (REG) for $3.15 billion in an all-cash transaction, in a move aimed at accelerating growth across Chevron’s renewable fuels value chain.

REG converts renewable resources into high-quality, sustainable fuels, such as renewable diesel and biodiesel, as well as renewable chemicals that significantly lower greenhouse gas emissions. The company operates 11 biorefineries in the US and Europe, with annual production (2020) of 519 million gallons of fuel.

Chevron stated that the acquisition combines REG’s renewable fuels production and feedstock capabilities with its large manufacturing, distribution, and commercial marketing position.

Mike Wirth, Chevron Chairman, and CEO, said:

“REG was a founder of the renewable fuels industry and has been a leading innovator ever since. Together, we can grow more quickly and efficiently than either could on its own.”

The transaction follows Chevron’s announcement from September 2021 with plans to commit $10 billion for investments in its low carbon businesses, targeting key areas including renewable fuels, hydrogen, and greenhouse gas reduction projects, among others. The company’s 2030 targets for its energy businesses also include achieving renewable fuels production capacity of 100,000 barrels per day, a goal that will be supported through the new acquisition.

After the acquisition, REG will be headquartered in Ames, Iowa, and CJ Warner, REG’s President & CEO is expected to join Chevron’s Board of Directors. Warner said:

“This transaction delivers premium cash value to shareholders and will give us additional resources as we aim to accelerate growth and strengthen our collective ability to deliver the sustainable fuels our customers and the world need. Our employees’ hard work and dedication have built a fantastic renewable fuels company and made this transaction possible. We look forward to joining Chevron’s team.”