Ethanol Blog

Biodiesel Industry Makes Push for tax Credit

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Nearly 100 representatives of the biodiesel industry are making their case with federal lawmakers this week to reinstate the biodiesel tax credit that expired in December 2016, during a planned fly-in to Washington, D.C.

There are attempts underway to reinstate the tax credit.

Sen. Charles Grassley, R-Iowa, told reporters on Nov. 15 that he filed amendments to the Senate tax bill to restart the biodiesel tax credit. However, Senate Republicans have indicated energy extenders are not expected to be part of comprehensive tax reform, but may instead be part of a separate extenders package.

The National Association of Convenience Stores has asked for a phase out of the tax credit.

In a Nov. 17 letter to U.S. Senate Finance Chairman Orrin Hatch, R-Utah, and ranking member Ron Wyden, D-Oregon, NACS Government Relations Director Paige Anderson said the tax credit has served its purpose of "incentivizing the use of biofuel in the nation's fuel supply." The NACS called for a five-year phase-out of the credit.

Grassley and others have called for converting the credit to a producers tax credit.

The NACS asked the committee to enact a short extension of the blenders' credit along with a phase out.

Both chambers of Congress are debating tax bills this week, ahead of the expected release of the latest renewable volume obligations in the Renewable Fuel Standard.

For years the biodiesel industry has fought the U.S. Environmental Protection Agency tooth and nail to set the volumes for biomass-based diesel higher. In addition, the industry has faced the frequent expiration of the $1 blenders credit. The loss of that credit in previous years has led to the closure of biodiesel plants and lost jobs.

In addition, the biodiesel industry has had to compete with biodiesel imports from Argentina and Indonesia, prompting the U.S. government to place anti-dumping duties on such imports.

"In meetings with their elected officials, NBB (National Biodiesel Board) members can share firsthand their experiences of operating in such an unstable business environment where the intermittent nature of the credit stymies investments," according to a news release from the NBB.

"Additionally, NBB members will discuss the results of a new survey conducted with 1,000 registered voters nationwide. The survey found that 82% of registered voters support a federal tax incentive. The same percentage of people polled expressed support for a national Renewable Fuel Standard."

Doug Whitehead, chief operating officer of the NBB, said the event is timely.

"This fly-in couldn't come at a better time, given the many federal policy priorities affecting the biodiesel industry," he said in a news release. "With the RFS volumes expected this week, reinstating the biodiesel tax credit is the next big policy issue we need to tackle to stabilize the business environment in which our industry is forced to operate."

Since the EPA's July proposal that called for no growth in biomass-based diesel volumes was released, the NBB has been pushing for the agency to bump up those volumes to match industry production capacity.

"Investors are unwilling to expand capacity if there's no signal of growth in the program," NBB said in a news release. "The July proposal offered up a reduction in advanced biofuels (of which biodiesel fills roughly 90%) and a flat line of biomass-based diesel—neither being growth."

In a letter to President Donald Trump in recent weeks, members of the NBB governing board called for at least 4.75 billion gallons for advanced biofuels for 2018 and at least 2.5 billion gallons for biomass-based diesel for 2019. EPA has proposed 4.24 billion gallons and 2.5 billion gallons, respectively.

After reports surfaced in October that the EPA was considering a further reduction in RFS volumes, an outcry from Midwest lawmakers and others led EPA Administrator Scott Pruitt to withdraw the proposal. Pruitt said the agency would set the biomass-based diesel number to at least 2.1 billion gallons as proposed. The agency also has proposed setting the advanced biofuels number at 4.24 billion gallons.

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