Many Reasons for U.S. to Count Carbon Savings from Biodiesel and Renewable Diesel

By Kurt Kovarik, Vice President of Federal Affairs, National Biodiesel Board

Special to The Digest

As the new Biden administration and a growing number of states examine options to address transportation carbon emissions, biodiesel and renewable diesel stand out as the workhorses of existing low-carbon fuel programs. State programs are sending a strong signal for market growth in low-carbon, drop-in diesel replacements over the next decade. NBB believes the market will double to 6 billion gallons by 2030.

NBB’s vision for growth is based on tangible market trends. For example, in 2019, California met its demand for low-carbon fuels in part with 830 million gallons of biodiesel and renewable diesel. And through the first half of 2020 – even as the COVID-19 pandemic restricted transportation – the state reported consuming nearly 400 million gallons. Alone, California is expected to create a market for more than 1 billion gallons of biodiesel and renewable diesel each year over the next several years.

Just as tangible are the carbon savings. In 2019, almost a decade into its Low Carbon Fuel Program, California achieved an overall 6 percent reduction in the carbon intensity of its transportation fuel mix. Biodiesel and renewable diesel accounted for 45 percent of that reduction. The two fuels are on pace in 2020 to generate the same percentage of California’s carbon reductions for the third year in a row. Since the start of the program, biodiesel and renewable diesel have generated more cumulative carbon credits than any other low-carbon fuel option in California.

Oregon is seeing similar successes in reducing carbon emissions. In 2019, the state reduced carbon emissions by 1.27 million metric tons through its Clean Fuels Program. It achieved 46 percent of those savings by using 76.8 million gallons of biodiesel and renewable diesel. In 2020, with all the economic disruptions, the state is on target to achieve nearly the same carbon reductions – with an even larger percentage coming from biodiesel and renewable diesel.

The success encouraged both states to extend their programs through the next decade. In fact, Oregon earlier this year set its sights on lowering transportation emissions 25 percent by 2035. Canada will also launch a Clean Fuel Standard – which could create a market for another 375 million gallons of biodiesel and renewable diesel by 2025 – and other states are considering forming regional programs. NBB believes the U.S. biodiesel and renewable diesel market could grow to 15 billion gallons by 2050.

The trend is driving changes to fuel production across the country. Refiners in California, Wyoming, and North Dakota made high-profile announcements this year about jumping into the low-carbon markets with renewable diesel. More quietly, at least one refiner in Kentucky is converting to biodiesel. And according to the U.S. Energy Information Administration, Mississippi, Arkansas, Pennsylvania, and California have all substantially increased biodiesel capacity since 2018.

Given this measurable progress in decarbonizing U.S. transportation, it’s odd that biofuels are often left out of carbon reduction strategies.

That was certainly the case five years ago when the United States joined the Paris Agreement – the United Nations-led international agreement to limit climate changing emissions. In its nationally determined contribution, the United States pledged by 2025 to reduce economy-wide carbon emissions by 28 percent (below 2005 baseline levels). U.S. leaders noted that the country was on a path to reduce emissions by nearly 17 percent as soon as 2020 – primarily through cleaner electrical generation.

The United States is no longer on that path. According to a recent report by the Environmental Defense Fund, many states are not achieving the clean electricity goals necessary to meet the overall national commitment to cut carbon emissions by 28 percent in the next five years.

It’s time to fully include the nation’s progress with biofuel use. After all, programs like California’s and Oregon’s follow the same low-carbon strategy as with electric generation – replacing carbon intensive fuels with cleaner, better alternatives to bend the curve on overall carbon emissions. California’s cumulative carbon emission reductions since the start of its LCFS in 2011 reached nearly 69 million metric tons this year. According to one estimate from Life Cycle Associates, nationwide biofuel use under the Renewable Fuel Standard cut carbon emissions by as much as 579 million metric tons over the first decade of the program.

The United States has more reasons to tally reductions in transportation sector carbon intensity. Transportation is the largest source of U.S. carbon emissions and it is the sector most reliant on petroleum. Replacing petroleum with a drop-in alternative – biodiesel and renewable diesel – immediately reduces carbon as well as particulate matter and hydrocarbon emissions that contribute to higher cancer, lung and heart disease rates, and other health impacts associated with poor air quality. Progress on those measures is vital right now. Moreover, these renewable fuels are the foundations for innovations in heating oil, sustainable aviation, and other distillate markets that are targets of a recent Congressional report outlining a national low-carbon strategy.

While the United States formally left the Paris Agreement in November, President-elect Biden has committed to re-join the agreement “on day one” of his administration. To rejoin, he’ll have to ensure the United States is back on track to meet – or possibly exceed – its original nationally determined commitment. Counting carbon reductions from biofuel use presents an opportunity to do that.