Biodiesel Presses Congress

Producers Want Support for Tax Credit Change

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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The repeated expiration of the biodiesel tax credit in the past decade has caused fits and starts in the industry. In the past couple of years, biodiesel plants were forced to shutter when the tax credit expired. (Photo courtesy of the Renewable Energy Group)

OMAHA (DTN) -- It seemingly has become an annual pilgrimage of sorts for the biodiesel industry: Producers from across the country flood the halls of Congress to try to convince lawmakers how important the extension of the biodiesel tax credit is to the future of what is the only advanced biofuel produced on a commercial scale.

That was the case againlastTuesday as the National Biodiesel Boardflew in nearly 100 of its members to Washington, D.C., to press for a more permanent extension of the tax credit.

The repeated expiration of the credit in the past decade has caused fits and starts in the industry. In the past couple of years, biodiesel plants were forced to shutter when the tax credit expired. It has been a cycle that has made it hard for producers to do business.

According to a news release from the NBB, producers are leaning on lawmakers to support a proposal that passed unanimously in the Senate Finance Committee last summer to reinstate the biodiesel tax incentive as a domestic production credit.

The $1-per-gallon credit expired on Dec. 31, 2014 -- the fourth time in six years Congress has allowed it to lapse. The continued uncertainty has "severely stymied investment and growth in the industry," NBB said in a news release.

"Members of Congress should understand that in the business world, this kind of unpredictability makes planning for growth nearly impossible," Harry Simpson, chief executive officer of Denver-based Crimson Renewable Energy, said in a release.

"People wonder why the economy isn't doing better, why more companies aren't hiring, and it's this kind of inaction in Washington that is holding companies back. We are urging responsible lawmakers to step up and pass a producer's tax credit as quickly as possible so we can get the biodiesel industry back on track. It is a critical issue for our company."

The proposal that passed the Senate committee would convert the incentive from a blender's credit to a producer's credit focused on domestic production. Right now, foreign biodiesel producers are able to receive the blender's credit -- something the North American industry has fought against tooth and nail.

With the blender's credit, biodiesel produced overseas and blended in the United States, is "undermining U.S. production and directing U.S. tax benefits to foreign producers," NBB said in a news release.

The Joint Committee on Taxation estimates that narrowing the eligibility for the credit to domestic producers would save about $90 million.

"This is a commonsense reform that will appropriately focus the incentive on stimulating U.S. production and jobs while streamlining IRS administration of the credit," said Anne Steckel, NBB's vice president of federal affairs. "It makes a good policy better. The biodiesel tax incentive has broad bipartisan support because it works to create jobs and economic activity, and it furthers our energy policy goals to diversify the fuel markets and reduce emissions.

"It is irresponsible that Congress has allowed this incentive to remain lapsed all year when we know the impact it has, particularly when billions of dollars of incentives for fossil fuels industries are written permanently into the tax code. We should have clear, forward-looking tax policy, not this unpredictable, on-again, off-again system where Congress waits until the 11th hour every year to get anything done."

Biodiesel is the first and only commercial-scale fuel produced across the United States to meet the Renewable Fuel Standard definition as an advanced biofuel -- meaning the U.S. Environmental Protection Agency has determined it reduces greenhouse gas emissions by more than 50% compared to petroleum diesel.

Biodiesel has displaced about 1.8 billion gallons of petroleum diesel in the U.S. in each of the past two years -- and more than 8 billion gallons over the last decade. It is produced in nearly every state in the country and is supporting more than 62,000 jobs. NBB is the industry's U.S. trade association.

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Todd Neeley