Renewable diesel fuel is a second-generation alternative fuel and is derived from biomass feedstocks, including oils or animal fats. Unlike conventional biodiesel, which is produced through a transesterification process, renewable diesel is made through a different process using the same feedstocks. The resulting fuel has a much lower cloud point, which improves the low temperature performance issues commonly associated with conventional biodiesel.

There are multiple benefits to using renewable diesel fuel as a commercial transportation fuel. It has the potential to improve the environmental impact of vehicle operation, reducing particulate matter for pre-EPA 2010 engines. Renewable diesel also requires less maintenance costs when compared with other alternative fuels, and there is no warranty risk for using renewable diesel fuel to power any Volvo model equipped with a Volvo engine.

The addition of renewable diesel as an approved fuel for Volvo models allows vehicle owners to reduce CO₂ emissions beyond those coming from the fuel economy improvements in the vehicle itself. According to the California Air Resources Board, the Life Cycle Analysis of renewable diesel under the Low Carbon Fuel Standard showed reductions in greenhouse gases by 15-80% depending on feedstock source.