Biodiesel Credit for Producers Eyed

STREATOR, Ill. (DTN) -- The Senate Finance Committee voted 23-3 to approve a measure containing a retroactive 2015 and 2016 biodiesel tax credit, but the credit would now go to producers not blenders.

The measure includes a new amendment to the tax extenders package for the biodiesel tax credit that was offered by Senator Chuck Grassley, R-Iowa.

The change turns the $1 gallon credit into a subsidy for production instead of seeking to create demand incentive by paying the credit to blenders.

"[T]his change is contrary to the original intent of the biodiesel tax credit, which was to promote the use of biodiesel in the marketplace and ultimately reduce our dependence on fossil fuels," the National Association of Convenience Stores said in a news release Thursday.

NACS, an international trade group representing retailers and suppliers, said the change would also affect how retailers are able to meet the Renewable Fuel Standard.

"In fact, EPA has indicated in its recently proposed 2014-2016 volume obligation that the biodiesel blender's credit helped increase demand for biodiesel, enabling EPA to propose a larger biofuel obligation," said NACS.