US biodiesel leaders press Congress to reform tax incentive

Nearly 100 biodiesel leaders from across the US are pressing lawmakers on Capitol Hill to reinstate the biodiesel tax incentive.

The $1-per-gallon incentive expired on 31 December, 2014, marking the fourth time in six years the US Congress has allowed it to lapse.

The continued uncertainty surrounding the incentive has severely stymied investment and growth in the industry, claims the National Biodiesel Board (NBB), the US trade association for biodiesel industry.

‘Members of Congress should understand that in the business world, this kind of unpredictability makes planning for growth nearly impossible,’ says Harry Simpson, CEO of Crimson Renewable Energy, a Denver-based company that operates one of the largest biodiesel refineries on the West Coast, in Bakersfield, California.

‘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,’ Simpson continues.

This year, the industry is backing a key reform passed by the Senate Finance Committee that would convert the incentive from a blender’s credit to a producer’s credit focused on US domestic production.

NBB says that under the existing blender’s structure, biodiesel produced overseas and blended in the US is increasingly taking advantage of the incentive, undermining US production and directing US tax benefits to foreign producers.

By narrowing the eligibility for the credit to domestic producers, the reform would save about $90 million (€84.3m), according to the Joint Committee on Taxation.

‘This is a common-sense reform that will appropriately focus the incentive on stimulating US production and jobs while streamlining IRS administration of the credit,’ says Anne Steckel, the NBB’s VP of federal affairs.

‘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,’ Steckel says.

She also calls for a clear forward-looking tax policy instead of the current ‘unpredictable, on-again, off-again’ system.

Biodiesel is first and currently only commercial-scale fuel produced in the US to meet the Environmental Protection Agency’s (EPA) definition of an advanced biofuel.

To receive the ‘advanced’ rating, the EPA must be satisfied the fuel provably reduces greenhouse gas emission by more than 50% when compared with petroleum diesel.