OMAHA (DTN) -- While the biofuels world waits for the release of the latest Renewable Fuel Standard volumes, a group of biofuels, trucking and fuel industry groups have united in their support for renewing the $1 biodiesel blenders tax credit.
Congress has allowed the tax credit to expire on numerous occasions, often leading to fits and starts in the 2-billion-gallon-plus industry. The credit expired most recently on Dec. 31, 2016. In a February 2018 spending bill passed by Congress, the credit was renewed retroactively for 2017. However, the credit again expired for 2018.
In a letter to Congressional leaders on Monday, the Advanced Biofuels Association, American Trucking Associations, National Association of Convenience Stores, National Biodiesel Board, National Renderers Association, NATSO (the national association representing America's travel centers and truckstops), New England Fuels Institute, Petroleum Marketers Association of America and the Society of Independent Gasoline Marketers of America asked for an extension of the credit for all of 2018 and 2019.
In addition, the groups asked for approval of a "permanent" tax incentive for biodiesel.
In the letter to Speaker of the House Rep. Paul Ryan, R-Wis.; Minority Leader Rep. Nancy Pelosi, D-Calif.; Rep. Kevin Brady, R-Texas; Senate Majority Leader Mitch McConnell, R-Ky.; Senate Minority Leader Chuck Schumer, D-N.Y.; and Sen. Orrin Hatch, R-Utah, the groups said they are united in their push for the credit.
"On behalf of a diverse community of biodiesel producers, feedstock providers, blenders, fuel marketers and consumers, we are pleased to announce that we have united around a single position -- to maintain and extend the biodiesel tax credit at the blender level," the letter said.
Most notably, the National Association of Convenience Stores was on record in November 2017 as calling for a five-year phase-out of the credit, but now has joined the call for an extension.
"The blenders credit has worked successfully to build a robust biodiesel and renewable diesel industry," the letter said. "As a result, the U.S. biodiesel and renewable diesel market has grown from roughly 100 million gallons in 2005 to nearly 2.6 billion gallons in 2017. The tax credit is an important demand stimulus, which improves plant efficiencies, encourages investment in U.S. distribution infrastructure, and supports high-paying jobs throughout the country, while providing fuels that significantly reduce greenhouse gas emissions. On top of this, it has afforded customers such as the trucking industry and heating oil users fuels that are more economic and environmentally competitive. Extending the biodiesel blenders credit will allow us to continue to provide the economic and environmental benefits associated with the program."
According to recent media reports, the EPA is set to raise the biomass-based diesel number from 2.1 billion gallons last year.
The industry made the case last year that the RFS volumes should be much higher -- somewhere above 2.5 billion gallons -- as biodiesel producers were poised to shatter last year's RFS volumes.
Expiration of the $1 tax credit has caused biodiesel plants to shut down production and to lay off employees in some years during the past decade.
In the letter, the groups said a permanent tax credit would help provide incentive for investment.
"Unfortunately, the uncertainty caused by the 'on-again, off-again' tempo of legislative extensions, including the Bipartisan Budget Act of 2018 which retroactively extended the biodiesel tax incentives through the end of 2017, has somewhat frustrated our sector's ability to anticipate the availability of the incentives and make the necessary investments," the letter said.
"This severely disrupts access to capital, as well as the ability to hire and expand. Given that Congress has frequently extended the credit retroactively, market participants have come to reasonably rely on the credit being retroactively extended when undertaking business and investment decisions. Accordingly, the undersigned trade associations and companies urge Congress to restore the tax credit as soon as possible. Since the credit's inception, the market responded as Congress intended. We urge Congress to extend this successful program."
Todd Neeley can be reached at email@example.com
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