Congress and President Biden have recognized the critical role that the transition to low-carbon biofuels in homes heated with fuel oil will play in the reduction of greenhouse gas emissions (GHG).
The recently passed Inflation Reduction Act (IRA), includes legislation that incentivizes the heating oil industry to improve the efficiency of its equipment while increasing the amount of biodiesel blended into the fuel. Both are essential in reaching the goal of reducing GHG emissions to zero. The IRA encourages the liquid heating fuels industry to continue to move forward with its transformation to a clean and green heating source. This bill’s enactment was largely due to the efforts of Senator Charles Schumer (D-NY), representing the State that uses the most heating oil.
The IRA provides for homeowner tax credits of $600 for each new oil/biofuel blend compatible heating appliance. Congress has set two major steps/goals to qualify:
- For equipment placed in service after Dec. 31, 2022, the equipment must meet 2021 Energy Star efficiencies and be suitable for a 20% blend of biodiesel or renewable diesel use.
- For equipment placed in service after Dec. 31, 2026, the equipment must have an Annual Fuel Utilization Efficiency (AFUE) of at least 90% and be suitable for a 50% blend of biodiesel or renewable diesel use.
Michael Devine, President of the National Oilheat Research Alliance (NORA), commented, “These are achievable goals for our industry. Most oil burner manufacturers are already compliant with the 20% biodiesel blend minimum for next year and plan to have models that meet the 2027 requirement of 50% biodiesel or renewable diesel in 2023. This is very exciting news as it indicates Congress’ endorsement of our industry’s efforts to reduce carbon emissions in heating fuels. It provides guideposts for a reasonable path forward in reducing greenhouse gases in fuel and improving equipment.”
