Albany’s chilling heating fuel mandate

If forecasts for colder weather and high energy prices are right, homeowners who use heating oil will pay more per gallon than last winter — and will use considerably more of it. (Oct. 3, 2012) Photo Credit: MELISSA KRAVITZ

While most New Yorkers are thinking about setting up their air conditioners, state lawmakers are being asked to approve a bill that would crank up heating bills for millions of families and businesses.

The legislation would force all New Yorkers who heat with oil to purchase a special blend that includes biodiesel, a fuel supplement derived from soybeans, vegetable oil, spent cooking oils and other agricultural products.

Supporters of the measure include supermarket billionaire John Catsimatidis, who owns a company building a massive biofuel processing plant in Brooklyn.

The sponsors, Assemb. Steve Engelbright (D-Setauket) and Sen. Brad Hoylman (D-Manhattan), say biodiesel is “more efficient” and that the requirement will “result in less air pollution.”

That certainly sounds good. There’s just one problem: neither claim is really true.

Besides being more expensive, a gallon of biodiesel produces about 17 percent less heat than a gallon of the conventional heating oil in use today. From production to distribution to consumption, the net energy gain for soybean-based biodiesel, for instance, is nearly three times lower than that of heating oil. For consumers, that means higher bills, more strain on furnaces and more frequent oil deliveries. So much for efficiency.

And despite coming from “renewable” plants, a number of peer-reviewed studies indicate that biodiesel fares just as poorly in the air pollution department. When it’s burned, biodiesel releases more nitrogen oxides, a family of greenhouse gases 300 times more potent than carbon dioxide, than heating oil.

Proponents of the mandate also claim it will help curb dependence on foreign oil. However, heating oil is just one of many distillates that come from crude oil. Shrinking the demand for one derivative wouldn’t affect the demand for what’s pumped out of the ground. And today, thanks to boosted domestic production — including hydraulic fracturing — the United States is the least reliant it’s been on foreign oil in 30 years.

There are also practical problems with forcing New Yorkers to use biodiesel. For starters, it’s too corrosive to move through the pipelines that carry home heating oil now, meaning any supplies would have to be delivered by truck. And as the temperature at which it’s stored drops, the risk of biodiesel congealing and becoming unusable goes up.

Besides, if biodiesel is so desirable in so many ways, why does the state need to force New Yorkers to use it?

Biofuels, including biodiesel, first entered the energy scene as a smart way to make use of surplus crops and other agricultural waste. But market conditions — chiefly, the widespread availability of cleaner-burning, less-expensive, more reliable petroleum oil — make it unsuited for widespread adoption. That’s why it remains a niche market.

So biofuel producers need government mandates and subsidies to keep them afloat, costing taxpayers billions of dollars a year. The New York City Council pioneered this approach in 2010 by requiring heating oil sold in the city to include a 2 percent biofuel blend, also known as B2.

Gov. Andrew M. Cuomo vetoed a similar statewide B2 heating oil last year, expressing concern that it would boost the budget impact of a seldom-claimed state biofuels tax credit. The new version of the bill is designed to address that concern.

Saving people money, cleaning up the air and making the country more energy-secure are all noble goals. It’s too bad Albany’s biodiesel scheme accomplishes none of them.

Here’s a better idea: instead of mandating biofuels, the state should offer incentives for improvements to furnaces to make them more efficient. And it should promote the development of the infrastructure needed to provide a steady supply of cleaner-burning natural gas to the many thousands of homes and businesses that would welcome it as an energy alternative.

Jude Clemente is principal at JTC Energy Research Associates and a contributor for Forbes. His recent report, “Bio-Fooled: Why a Biodiesel Heating Mandate Is Wrong for New York,” was commissioned by the Empire Center and the Manhattan Institute.