Biden win shines spotlight on renewable fuels
President Elect Joe Biden looks set to harness growing bipartisan support for renewable fuels as the Democratic Party steers the US in a new green energy direction.
Biden, who has pledged to move the US to a zero-carbon emissions scheme by 2050, may see renewable fuels - whose development is supported by oil and green energy industries - as a way of bypassing a divided Congress.
Some refiners have been investing in cleaner fuels derived from feedstocks like cooking oil, taking advantage of state subsidies that have been designed to reduce carbon emissions, a Reuters report says. State and federal incentives could expand that market, giving energy companies revenue opportunities, while reducing carbon emissions, the report continues.
“I don’t see any reason why a divided Congress would have a problem encouraging renewable fuels, as it affects key states that Democrats and Republicans are motivated in,” Bill Barnes, director of energy consultancy Pisgah Partners, was quoted as saying.
The US consumes roughly 21 million barrels of renewable diesel per year, compared with 4.1 million barrels daily for conventional distillate fuel oil, according to data released by the US Energy Department.
However, the US oil market has been hit hard by the coronavirus pandemic, with demand for motor gasoline falling by 13 percent so far in 2020, forcing several refineries to close or convert operations to produce more biodiesel.
Many refineries have announced plans this year to convert their facilities for renewable diesel production, supported by state incentives. In the state of California, refiners can generate tradable credits by producing renewable diesel because it has a lower carbon intensity when compared to fossil fuels and sell them on to other fuel producers.
Oregon has a similar program, while several other US states are also developing standards for renewable diesel, the report adds.
Legislators in Farm Belt states such as Minnesota, Iowa and Illinois could see the market as a way to help boost demand for their constituents’ products.
Despite this, it remains unclear whether renewable fuels legislation could pass a Republican-led Senate, with senators representing oil states likely to push back against legislation that transitions away from the oil industry.
The oil industry has been braced for more federal incentives for renewables if Biden won the presidency, as he had stated in August that “a Biden-Harris Administration will promote and advance renewable energy, ethanol, and other biofuels to help rural America and our nation’s farmers, and will honour the critical role the renewable fuel industry plays in supporting the rural economy and the leadership role American agriculture will play in our fight against climate change.”
The production of renewable diesel will also help refiners reduce their exposure to costs to comply with US biofuel blending obligations, says Stewart Glickman, energy analyst at CFRA Research.
“If you have something optically ESG-friendly, that probably carries more weight today than it used to,” he says.
The Democratic party aims to increase investment in clean energy and especially water technologies and efficiencies, according to its 'Building a stronger, fairer economy' report (click here).
It will also strive to "close the digital divide" that deprives more than 20 million Americans of high-speed internet access, by investing in broadband and 5G technology, including rural and municipal broadband.
