Bill to Extend Biodiesel Tax Credit Introduced

Climate change legislation is moving through Congress, and eventually one can expect there will probably be future legislation dealing specifically with energy sources and renewable energy. In the meantime, various stakeholders in the renewable fuels industry are making their arguments for why their technology should be included in any pending legislation

One issue of concern to the biodiesel fuels industry is the tax credit that currently exists for blending biodiesel with petroleum diesel fuel. Under current law, this tax credit is set to expire by the end of the year.

As Ken Anderson reports for Brownfield’s Ag News, this has caused some consternation for the biodiesel industry. Anderson reports that the National Biodiesel Board believes “uncertainty surrounding the federal commitment to biodiesel threatens to undermine the progress made in recent years.” To visit the National Biodiesel Board website click here. To read the Anderson article click here.

Failure to extend the tax credit will certainly have an effect on the 176 biodiesel plants currently in operation in the United States. These plants generate 2.6 billion gallons in biodiesel capacity. Additionally, 39 new plants are under construction or expansion.

The biodiesel industry does have some strong allies on Capitol Hill—in particular, Senators Maria Cantwell (ND), Charles Grassley (IA), and Blanche Lincoln (AR). The Senators Cantwell and Grassley are the lead sponsors of legislation recently introduced that would extend the tax credit for another five years. The text of the legislation is not yet available. Senator Blanche Lincoln (AR) introduced a similar measure in May that would extend the income tax credit for biodiesel used for fuel, as well as the excise credits for biodiesel used to produce biodiesel mixtures and for biodiesel mixtures alone, through 2018. To read the Lincoln bill click here.

It remains to be seen if these senators can somehow weave their legislation into a bill moving through Congress or pass the legislation as a stand-alone measure.

Posted: 08/11/09