US Senate introduces bill to extend biodiesel tax credit, moves towards producers’ credit

The US Senate has introduced a bill to extend the $1/gallon biodiesel tax credit through 2019 and to transform it from a blenders’ credit to a domestic production credit.

The bill mirrors a House of Representatives legislation introduced in May, which had the similar goals of extending the tax credit and revamping it as a producers’ credit.

Anne Steckel, VP of federal affairs at the trade association National Biodiesel Board, urged the Senate to pass the legislation urgently.

“Biodiesel and renewable diesel producers around the country are yet again facing what effectively amounts to a tax increase in less than six months. Congress can keep that from happening by passing this bill,” Steckel said in a statement.

In December, the US Congress granted a two-year extension to the second generation biofuel producer tax credit, the special depreciation allowance for second generation biofuel plant property, the biodiesel and renewable diesel fuel credit, the alternative fuel and alternative fuel mixture excise tax credit, and the alternative fuel vehicle refueling property tax credit.

Those credits are currently scheduled to expire at the end of the current year.

“[This bill] will give producers the certainty they need to hire and grow in the coming years. It will continue our success in diversifying the diesel market and reducing our dependence on petroleum. And it will help clean the air by cutting carbon emissions and other pollution,” said Steckel.

The US biodiesel tax incentive has since its beginnings been a blenders’ credit, which has allowed biodiesel produced elsewhere but blended into the fuel supply in the US to apply for the credit, a practice US producers see as unfair.

Approximately 670 million gallons of biodiesel and renewable diesel was imported to the US in 2015, making up nearly a third of the market.

“[The bill] also will appropriately reform this incentive by applying it only to domestic biodiesel production, ending a growing practice where foreign producers are taking advantage of our tax system.

“Our tax law should not be incentivising foreign fuel, and this bill fixes that loophole so that we’re stimulating jobs and economic development here at home,” Steckel concluded.