Many state programs across the country add momentum for Clean Fuels policy

BY JEFF EARL, Director of State Regulatory Affairs
Clean Fuels Alliance America

As state and federal lawmakers continue prioritizing environmental and energy issues, carbon policies and incentives are steering the future of biodiesel, renewable diesel and sustainable aviation fuel (SAF). While the Renewable Fuel Standard (RFS) continues to be an important federal policy driving biomass-based diesel production, states are increasingly taking leadership roles developing and implementing their own renewable fuel policies.

California’s Low Carbon Fuel Standard (LCFS) continues to build the framework for the success of biodiesel and renewable diesel. More than 1.5 billion gallons of biomass-based diesel was used in 2022, displacing nearly half of the entire diesel fuel pool in California and accounting for the largest source of carbon reductions in the program. Carbon programs in Oregon and Washington are expected to see similar results from the increase in biodiesel and renewable diesel consumption helping achieve carbon reduction targets in the hard to electrify sectors.

In Colorado, legislation introduced this year would have exempted biodiesel and renewable diesel from the state’s excise tax for special fuels. New Mexico was again on the cusp of passing a Clean Fuel Standard and incentives for blending and selling biodiesel. Although these bills did not pass, they signal new opportunities and markets for biodiesel and renewable diesel.

Several policies supporting the sale and production of biodiesel passed in Iowa, Illinois and Missouri last year, resulting in an additional 280 million gallons of biodiesel demand. These successes have led to states like Nebraska, Indiana and Michigan pursuing similar initiatives.

A proposal was introduced in Nebraska incentivizing the sale of biodiesel, bringing together a large supporting coalition hoping to make home-grown fuels a priority in the state. This bill could be one of last pieces of legislation that the unicameral legislature approves before adjourning in June.

Indiana and Michigan also considered legislation this year that would create tiered incentives for the sale of biodiesel. These proposals offer escalating value of tax credits for fuel retailers who offer higher blends of biodiesel to their citizens. This type of program has been successful in other states and continues to be the preferred option for prioritizing biodiesel in Midwest states.

Indiana and Michigan also considered legislation this year that would create tiered incentives for the sale of biodiesel. These proposals offer escalating value of tax credits for fuel retailers who offer higher blends of biodiesel to their citizens. This type of program has been successful in other states and continues to be the preferred option for prioritizing biodiesel in Midwest states.

Numerous Northeastern states are considering policies for biodiesel, renewable diesel, Bioheat® fuel and sustainable aviation fuel (SAF). Making up 40 percent of the home heating oil market in the northeast, New York, Connecticut and Rhode Island previously enacted Bioheat® fuel mandates requiring increasing amounts of biodiesel to be blended with traditional heating oil. Vermont recently approved a Clean Heat Standard that would require heating oil dealers and suppliers to buy or sell credits based on the carbon content of their fuel, including biodiesel and renewable diesel.

These efforts and successes are due in large part to the state soybean and Clean Fuels-member organizations who work diligently with our state and federal advocacy teams to implement policies that meets America’s energy needs while adding economic value here in our heartland.