US renewable fuels legislation could garner bipartisan support under Biden

NEW YORK, Nov 10 (Reuters): Renewable fuels are a niche market for now, but with Democratic President-Elect Joe Biden set to enter office with a divided Congress, legislation supporting demand for products like renewable diesel could garner bipartisan support.

Biden, elected president last week, defeating Republican Donald Trump, has pledged to move the United States to a zero-carbon emissions scheme by 2050. Under a divided Congress, however, ambitious plans to tackle rising emissions may be put on ice.

Renewable fuels, however, may be different: their development is supported by some in both the oil and green energy industries.

Some refiners have been investing in cleaner fuels derived from feedstocks like cooking oil, taking advantage of state subsidies designed to reduce carbon emissions. State and federal incentives could expand that market, giving energy companies revenue opportunities while reducing carbon emissions.

"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," said Bill Barnes, director of energy consultancy Pisgah Partners.

The United States consumes roughly 21 million barrels of renewable diesel per year, compared with 4.1 million barrels used every day for conventional distillate fuel oil, according to US Energy Department data.

Legislators from Farm Belt states such as Minnesota, Iowa and Illinois could see the market as a way to help boost demand for their constituents' products.

It is unclear whether renewable fuels legislation could pass a Republican-led Senate. Senators representing oil states would be less likely to push for legislation that transitions away from the oil industry.

The US oil market has been hit hard by the coronavirus pandemic. Demand for motor gasoline has dropped 13 per cent so far in 2020, forcing several refineries to close or convert operations to produce more biodiesel.

Many refiners announced plans this year to convert facilities for renewable diesel production, supported by state incentives. In California, refiners can generate tradable credits by producing renewable diesel because it has a lower carbon intensity than fossil fuels, and sell them on to other fuel producers.

Oregon has a similar programme, and several other US states are also developing standards for renewable diesel.

The oil industry was braced for more federal incentives for renewables if Biden won the presidency.

In August, Biden stated 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 honor 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."