Will the last few months of pro-biofuel policies and situations solidify into permanent support?
For many, the first half of 2026 may well have offered foundational changes necessary for the blossoming of a resurgence of support for biofuels.
- The EPA released the Renewable Fuel Standards (RFS) for 2026 and 2027 with the highest blending volumes in history.
- The Treasury Department finally released guidance for the biofuels production credit, also known as the 45Z credit, including heating fuels as eligible for the tax credit.
- The Department of Energy updated the GREET model used to determine the value of 45Z credits to remove the onerous indirect land-use change (ILUC) penalties in those calculations.
- ASTM D396, the technical specification for fuel oils, was updated to included grades for fuel blends containing 21% to 50% biodiesel.
- As tanker traffic through the Strait of Hormuz was strangled during the Iran war, heating oil and crude prices spiked to levels not seen since the 2022 outbreak of the Russia-Ukraine War or the 2008 financial crisis. Biodiesel prices remained stable and blended fuels were able to soften some of the price increases.
Are these changes making a difference? Have they changed the playing field for wholesalers or retailers? What are the anticipated long-term effects? Oil & Energy Magazine asked these questions to Bob Brown, Owner, Broco Energy of Massachusetts, and Kevin Grant, Director of Renewable Fuels, Sprague.
In light of the current supply and price issues for crude oil and traditional heating oil, have you seen an increase in requests for higher blends of biofuels?
Broco: Yes, especially when everything first kicked off and volatility went to the moon. On the commercial fuel sector, they were more open to increasing their blends – say a clear diesel and B10 and take advantage of the economies of biodiesel and renewable. Commercial users, their prices are locked in per quarter – and they can take advantage of the market with their fixed blending programs.
Depending on the kinds of programs and incentives, such as in Rhode Island, New York, Connecticut, and even Massachusetts with the APS [alternative energy portfolio standard], we can post a lower price that folds in any incentive the state has to offer for biofuels, or even the federal producers’ credit, getting to a lower price per quarter.
Sprague: There has been an increase nationally over the past several months in on-road diesel blending. In the Northeast, it is possible that higher distillate prices, and the increase in the Renewable Volume Obligation, may translate into the higher level of bio usage in the market. Traditionally we have seen when blend economics improve that it leads to higher customer demand for bio blends in both heating oil and on-road ULSD. However, given the volatility in both the petroleum and renewable fuels markets, this increased usage is far from a certainty.
Has the new ASTM tier for B50 blends led to any changes in your short term or long-term plans for volumes of biofuels and higher blends?
Sprague: The current supply chain infrastructure would make widespread adoption of B50 challenging. However, the market continues to move toward higher renewable fuel blends. This growth is not only in biodiesel but in renewable diesel adoption. In some instances, renewable diesel as a total drop-in replacement fuel may be better positioned for growth in the Northeast market. Sprague will continue to configure our terminals to offer the products that meet market demand and regulatory requirements.
Broco: It makes it a lot easier – we always have full disclosures on the delivery ticket when delivering higher blends. If there’s a mandate for B20 and we’re delivering more, we let our customers know. Having the ASTM for B50 builds the confidence overall.
We’ll promote the ASTM in our marketing – some people don’t understand what bioheat is, and having an ASTM spec sheet legitimizes what our clean energy is in the fossil fuel market; legitimizes the product, even beyond BQ-9000 testing.
It also helps our work with federal and state agencies looking to decommission their #6 oil or #4 oil. They can be confident that a B50 blend, with the spec sheet accompanying the delivery, will help these agencies meet their emissions reduction criteria, which helps more federal and state agencies adopt higher blends.
How have the rising biofuel mandates in Rhode Island, Connecticut and New York and potential clean fuel standards in many of the other states in the Northeast/East Coast affected your supply and distribution?
Broco: It’s all for the positive – we can pivot easily with new suppliers coming online. We have a good partner with Chevron/REG; but for some of the bigger terminals that are mostly on the coastline, the new domestic incentives made the railroad economics stronger than it had been in the supply chain. Rail is predominant for domestic transport; barges are used for foreign. The producers credit has given us, every U.S. oil and gas company a competitive advantage. Rail has become a very efficient mode of transport with Class 1 and short-line rail lines to connect the supply chain coast to coast, north to south.
Overall, for the Northeast in general, it has made it easier having multiple states with incentives in place. It will make it easier for states like New Hampshire or Massachusetts that haven’t implemented biofuel standards or Clean Heat Standards to adopt them, now that we’re bringing more volume into the region.
Sprague: Distributors have had to reconfigure existing assets to be able to store and supply the higher mandate levels. The investment has been manageable because we are able to utilize existing infrastructure and not have to make substantial capital investments that some other technologies would entail. More importantly, our customers can utilize their current infrastructure for these fuels and not have to make those capital investments. Northeast states are now delaying implementation of clean heat standards and electrification plans mostly due to cost to the end user. This capital cost avoidance is one of several reasons why liquid renewable fuels remain the most cost-effective way to decarbonize currently in our region.
Is there anything you’d like to add about biofuels infrastructure or anything new with your company?
Sprague: Starting with biodiesel in 2007, and followed by renewable diesel, Sprague has become one of the largest distributors of renewable fuels in the Northeast. Sprague believed that renewable fuels would increasingly become a larger component of the fuel mix here in the Northeast, due to a combination of regulatory changes and consumer demand. Today we have biodiesel and biodiesel blends at over 20 different terminals we own or operate. In addition, we have renewable diesel at three separate locations. Starting in 2024, we expanded into the supply of renewable diesel to the marine sector when we were awarded the City of New York contract to supply its ferries, including the Staten Island Ferry. We see continued growth for this segment of the business and believe our waterborne assets will allow us to actively supply this sector.
Broco: From a mid-stream perspective and the buildup of the biofuel infrastructure: We recently added 100,000 gallons of renewable diesel storage. We’re taking that all in by rail for the contract with Massport. We’re investing in additional rail infrastructure – we have a 65 rail car spot siting and the current project will increase it to 85 rail cars.
This will help us meet the demand we see coming soon. Hopefully, Massachusetts will implement a clean fuel standard. We’re work with other companies, forming a co-op to increase our purchasing power and bring bigger volumes at lower prices to Massachusetts and southern New Hampshire.
Our mission and commitment is to provide renewable diesel and biofuels and keep someone from looking at another source of energy, like electric or solar. We provide the no-cost solution. Send a tech in to adjust air filters – the new equipment is interchangeable for B20, B50, RD50 – and it all helps navigate an unstable market like we’re coming off of from the war.
Renewables add more stability to the market, with more companies increasing production, offering a more stable price for consumers.
For more information, contact Kevin Grant at Sprague at kgrant@spragueenergy.com, or Bob Brown at Broco Energy at bbrown@brocoenergy.com.
