Skip to main content

Biodiesel Tax Credit Tabled by Senate

WASHINGTON -- The current biodiesel blender tax credit -- which offers a $1 per gallon subsidy to producers -- is set to expire Dec. 31, and despite this, the Senate has decided to table consideration of an extension until early next year, as it faces other priorities including the health care debate. The move has sparked concerns by biodiesel makers over their future, reported.

Proponents of the credit argue the delay would force producers to cease operations and lay off workers, as consumer demand would plunge without the credit. Sens. Max Baucus, a Democrat from Montana, and Republican Charles Grassley of Iowa have said they will take up the legislation when Congress reconvenes at the first of the year, according to the report.

"The tax credit is essential in maintaining the competitiveness of this clean-burning, domestically produced green fuel," Grassley said recently in a floor statement cited by the Web site. "Without an extension of the tax credit, all U.S. biodiesel production will grind to a halt. Plants will be shuddered, and workers will be let go. No one should be surprised by the upcoming expiration of this tax credit."

The House of Representatives earlier this month passed a one-year extension of the current blender tax credit. The legislation is part of a package known as H.R. 4213, and includes $5 billion in individual tax relief, $17 billion in business tax relief, $1.2 billion to encourage charitable giving, $2.6 billion for disaster tax relief provisions and more than $1 billion to extend expiring energy tax provisions, the Web site reported.

"Our members want to support green initiatives," Lisa Mullings, president and CEO of the National Association of Truck Stop Operators (NATSO), said in the report. "But they are concerned that if they make the investment in biodiesel fueling infrastructure and the tax credit isn't renewed, they won't be able to sell the biodiesel because of the price disparity between biodiesel and other fuels."

A recent National Biodiesel Board (NBB) study examined the economic impact of the biodiesel industry and the consequences of allowing the tax credit to lapse, and found the delay would cause a major loss of jobs and income; increased demand for petroleum diesel; a degradation of energy security; decreased demand for soybean oil and lower soybean prices, leading to a negative impact on farm income; stranded investment as biodiesel capacity is idled; and lost tax revenue for states and local governments.

"Since it was enacted in 2004, the biodiesel tax incentive has allowed the nation to reap the economic, energy security and environmental benefits associated with commercial scale production and use of biodiesel," Manning Feraci, vice president of federal affairs for the NBB, said in the report. "Allowing the credit to lapse will compound the already daunting challenges facing the industry and will cost the nation another 23,000 jobs in addition to the 29,000 jobs that were shed in 2009."

Related News:

Atlas Oil Warns of Higher Biodiesel Cost

This ad will auto-close in 10 seconds