Congressional negotiators have agreed to revive and extend through 2022 the expired $1-a-gallon tax credit that subsidizes biodiesel and renewable biodiesel production.
The tax incentive lapsed at the end of 2017, but the extension through 2022 was included in a 58-page tax package that will be considered as a manager's amendment to a massive fiscal 2022 domestic spending bill to fund the departments of Agriculture, Interior and other departments and agencies. The credit will be retroactive to Jan. 1, 2018.
The "deal provides the policy certainty that the biodiesel industry has been seeking to support investments and continued growth of production," said Donnell Rehagen, CEO of the National Biodiesel Board. "NBB and its members are grateful that congressional leaders are providing a positive signal before the year’s end."
The biodiesel tax credit’s chief proponent, Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said he discussed the issue with House Speaker Nancy Pelosi while she was flying back from Europe, but the deal wasn’t final until early Tuesday morning.
A tax credit for short-line railroads also was made effective through 2022, and the tax package also includes extensions for tax breaks that subsidize cellulosic biofuels, electric vehicles and alternative fuels equipment.
“After years of uncertainty for many Americans, we’ve finally come to an agreement on the future of these temporary tax policies," Grassley said. "Many people in my state, farmers and processors alike, can breathe a sigh of relief that Congress will extend the biodiesel tax credit retroactively and through 2022."
The bill also would extend the wind power production credit for one year, which was a major priority for Democrats and a key part of the congressional negotiations, Grassley said.
The Finance Committee's top Democrat, Ron Wyden of Oregon, said the wind subsidy "has been moving us toward a clean energy future. A comprehensive overhaul of the energy provisions in the tax code is needed to kick our dependence on Big Oil, but we can’t risk backsliding."
Democrats failed, however, to get an expansion of tax subsidies for electric vehicles. “President Trump stuck to his guns against a Congress hell-bent on saddling the cost of the Green New Deal on middle class American taxpayers," said Thomas Pyle, president of the American Energy Alliance, an advocacy group that promotes policies benefitting fossil fuels.
Rural electric cooperatives got provisions included to ensure that they don't lose their tax-exempt status when they accept disaster assistance or receive government assistance for broadband expansion.
Under provisions of the 2017 Tax Cuts and Jobs Act, rural electric co-ops lose their nonprofit status if more than 15% of the revenue comes from federal, state or local governments. Government grants and subsidies are deemed to be nonmember income.
The agreement "repeals one of the glaring errors in the Republican tax bill that would have socked rural ratepayers with higher electricity bills," said Wyden.
A second provision would save electric co-ops more than $30 million by lowering the premiums paid to the Pension Benefit Guaranty Corp. for coverage of their defined-benefit plan, according to the National Rural Electric Cooperative Association. More than 880 electric co-ops participate in the NRECA plan, which covers about 56,000 co-op employees nationwide.
“We’re thrilled and thankful that Congress recognizes the importance of addressing the taxing problems that could handcuff electric co-ops and America’s rural communities,” said Louis Finkel, NRECA's senior vice president of government relations. “Together, these bills preserve the fundamental nature of the electric cooperative business model and will save electric co-ops tens of millions of dollars each year.
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