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Biodiesel, Soybean Crush Expansion Moves Amid Push for Credit Extension

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Iowa-based biodiesel company Renewable Energy Group is set to more than double production capacity at its plant in Ralston, Iowa, according to a news release Tuesday, one day after a local farmers cooperative completed an expansion at a soybean-crushing facility.

The company scheduled a groundbreaking ceremony Nov. 8, on a project to expand production capacity from 12 million to 30 million gallons at what was REG's original biodiesel plant built in 2001. At that time the facility was the largest biodiesel plant in North America.

REG is moving forward with the $24 million expansion at a time when doubts persist about the future of a $1-per-gallon blender's tax credit set to expire at the end of 2016. It remains unclear whether the credit will be extended in a lame-duck session of Congress.

”Ralston is where it all began for REG and the experience and lessons we have learned, and are still learning, have helped our company grow into what it is today,” Daniel J. Oh, president and chief executive officer of the company said in a statement.

Once completed, the REG's biodiesel plant expansion would increase the company's total nameplate capacity at its 11 plants to 470 million gallons annually.

The expansion announcement comes on the heels of Landus Cooperative expanding an adjacent soy-crush operation in Ralston. On Monday, Landus announced the completion of a $27 million expansion of its soybean processing capacity by about 50%.

According to a news release from Landus, that expansion creates demand for an additional 6 million bushels of soybeans for a total of 20 million bushels annually. Landus is a farmer-owned cooperative that originates soybeans from its membership of more than 7,000 farmers in Iowa and Minnesota.

Last week the National Biodiesel Board continued to press Congressional leaders to pass an extension of and reform the blender's credit before it expires on Dec. 31, in a letter sent to tax committee leaders in the House and Senate.

"We strongly urge you to extend the biodiesel tax credit and take this opportunity to make a simple, common-sense reform by focusing the credit on U.S. production," Donnell Rehagen, interim NBB chief executive officer wrote in the letter.

"Legislation pending before Congress – S. 3188 and H.R. 5240 – would accomplish these objectives by extending the incentive through 2019 and changing it from a blender's credit to a domestic producer's credit. The legislation has strong support from American biodiesel producers and strong bipartisan support in both the House and Senate – reflected last year when a similar proposal passed the Senate Finance Committee.

"Many biodiesel producers who are now poised to expand and hire would likely cut jobs and production. Congress can avoid this with a long-term extension giving producers the policy stability they need to plan for the future."

With the current tax structure foreign biodiesel imported to the United States and blended with petroleum diesel in the U.S. is eligible for the tax incentive.

"In 2015 alone, some 670 million gallons of biodiesel and renewable diesel was imported to the U.S., making up nearly a third of the U.S. market," NBB said in a news release.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow me on Twitter @toddneeleyDTN

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