Eric DeGesero's Column on NJ Bio-Based Heating Oil Act

Written on: August 14, 2013 by ICM

By Eric DeGesero
The New Jersey Legislature should be commended for considering progressive legislation that will reduce the carbon intensity of our state’s fuel, encourage new capital investment in New Jersey and support small businesses.
Sponsored by Sens. Kip Bateman and Jim Whelan and Assembly members John Amodeo and Celeste Riley, the New Jersey Bio-Based Heating Oil Act requires all heating oil in the state to have a low percentage of biodiesel blended into it by 2014. Far from being “the latest government manipulation in the energy sector,” as one critic claimed, the bill empowers our state to produce and consume domestic energy. Our state will experience the benefits of the blend, called Bioheat, while it likely will have no price impact on heating oil and require no expensive investments in infrastructure.
The bill is sound public policy that has come under attack from those who want to defend the status quo. This includes the recent guest opinion “N.J.’s proposed Bio-Based Heating Oil Act is bad energy policy” (July 29) authored by Mike Proto of Americans for Prosperity’s New Jersey chapter. The bill has come under attack from those on the left, too, such as the Sierra Club. Such a broad range of opposition to legislation leads many to think there is a fundamental deficiency with the bill, but that is overthinking it.
Some points about the legislation should be clarified.
Price. If anyone can accurately forecast the future price of any commodity, let alone fuel, he should parlay that ability into more socially redeeming use. AFP cites an Energy Information Administration study referring to the cost to operate electric generating facilities, but what we are talking about is the cost to operate the furnace in my basement. There is no rational comparison between the two. Furthermore, according to the National Biodiesel Board, the net cost of biodiesel has, on average, been less than heating oil for most of the last year. The cost reflects a federal tax incentive and the value generated by the federal Renewable Fuels Standard, smart energy policies that stimulate domestic fuel production. Additionally, if price becomes an issue, the bill says the state can waive the requirement to blend biodiesel into heating oil.
Food supply. Detractors say their opposition to biodiesel is because it “diverts” food into fuel. This is false. Biodiesel is produced from waste products such as inedible animal fats, used cooking oil or the by-products of soy processing operations. Soybeans are grown primarily for the meal, for animal feed, and soybean oil is a by-product produced in great abundance. Biodiesel allows farmers to process waste into a meaningful product. If anything, biodiesel production has a positive effect on the food supply, helping to create demand for by-products and stabilizing our food supply.
Air quality. AFP is so determined to disparage biodiesel, not only does the organization compare apples to oranges as it relates to operating electric facilities, it is barking up the wrong tree by lumping it in with biomass combustion. The burning of wood chips (biomass combustion) is a completely different fuel source. Biodiesel is America’s only commercially available, domestically produced, advanced biofuel, as defined by the Environmental Protection Agency, because it reduces greenhouse gases by at least 50 percent compared to petroleum over its life cycle. Bioheat is cleaner burning.
Performance. Research at Penn State University in conjunction with Brookhaven National Laboratory has shown that a blend of up to 20 percent biodiesel in heating oil actually increases system performance. Furthermore, biodiesel helps the heating oil market in its transition to a fuel with greatly reduced sulfur, since biodiesel provides the same beneficial operational characteristics of the sulfur it is replacing.
Americans for Prosperity, funded by the Koch brothers, consistently defines itself as a defender of the free market against “crony capitalism.” Therefore, one would expect it to lead by example and stand on the high ground, refusing any temptation to take a subsidy, as Georgia Pacific, the paper company owned by Koch Industries, has done by availing itself of a tax credit for mixing wood pulp waste with diesel fuel.
When coupled with the energy efficiency measures many full-service heating oil dealers perform, the move to biodiesel is a natural progression for us, and one of which I’m proud to be a part.
Eric DeGesero is executive vice president of the Fuel Merchants Association of New Jersey (