TAMPA, Jan. 27, 2016 - Less than a month into the year and the National Biodiesel Board (NBB) has already begun its lobbying effort in Congress to convince lawmakers to stop subsidizing biodiesel imports.
With strong support firmly in place in the Senate for changing the blenders’ credit to a producers’ credit – a move that would cut hundreds of millions of dollars in U.S. subsidies from being paid to foreign companies that export here - much of the lobbying is being aimed at the House. Industry officials say they are already making headway.
Kenny Hulshof, a former congressman who represented the 9th district of Missouri and currently the vice chairman of Kit Bond Strategies and lobbying for the NBB, told Agri-Pulse that he has already had substantial conversations with Rep. Kevin Brady, the new chairman of the Ways and Means Committee.
Hulshof, who spoke at the group’s annual convention this week in Tampa, said Brady was very receptive to the industry’s request for a producers’ credit, but not yet ready to say that he is a supporter or opponent of the subsidy change.
“He’s not a foe of biodiesel, but not necessarily a supporter of biodiesel,” said Hulshof.
But the former congressman said his message to Brady on the concern about the flood of imports of biodiesel from foreign companies taking advantage of the $1 per gallon blenders’ tax credit in the U.S. was clear.
“He gets that,” Hulshof said.
The U.S. blenders’ credit can be paid to any company in the U.S. that blends biodiesel into fuel, even if that biodiesel was shipped here from abroad. It’s a massive incentive to foreign companies because blenders normally pass along benefits of the subsidy to the biodiesel producers. But if NBB gets its way – and Jobe predicts it will – Congress will make the change to paying out the credit only to domestic biodiesel producers.
Argentina exported nearly 200 million gallons of biodiesel to the U.S. in 2015, up from about 130 million gallons in 2014, said Susan Olson, head of the biofuels division of Genscape, a company that provides energy information and analysis.
“We didn’t lose that fight – we just haven’t won it yet,” Jobe said about the failure to get Congress to change the blenders’ credit to a producers’ credit last year.
But part of the reason it didn’t happen in 2015 is likely because it’s a massive undertaking and there are plenty of interests fighting against the change because they are making money off of imports, said Tim Urban, a lobbyist with Ernst & Young who is working on behalf of NBB.
“In all candor, there are some people who are involved in the business of bringing in foreign fuels who are making money in that business enterprise and, regardless of what NBB or the members of Congress think about the policy, one of the rules of tax lobbying is that once somebody has attached themselves to a stream of money through a tax incentive, it’s hard to get them to voluntarily let go of it,” Urban said.
But opposition won’t kill the effort and may even help NBB’s effort by making the group fight harder and better justify its position this year, he said.
Meanwhile, Hulshof said he has not yet gotten a commitment from the Ways and Means chairman for a hearing.
But Emily Schillinger, communications director for the committee, told Agri-Pulse that the issue is on Brady’s radar.
“The chairman and Committee are aware of the issue and will continue to consider potential options as the debate moves forward,” she said.
And early attention this year on Capitol Hill will be key, NBB CEO Joe Jobe said.
“For the next months, we have to focus on educating particularly the leadership in the House … about the virtues of a producers’ credit versus a blenders’ credit,” Jobe told Agri-Pulse in an interview. “Primarily it’s a huge savings to the Treasury and it’s a way more efficient use of tax-payer dollars.”
Congress’ Joint Committee on Taxation has estimated that the government would save about $90 million per year by enacting a producers’ credit and cutting off subsidies for imports, but NBB officials say that is a very conservative estimate.
NBB officials agreed that there is a lot of lobbying to be done this year – especially in the House – but there is already some support for the producers’ credit in the Ways and Means Committee. It was late in the year with relatively little time for any consideration, but Reps. Kristi Noem (R-S.D.), Bill Pascrell (D-NJ) and Rod Blum introduced a bill on Dec. 3 called the Biodiesel Tax Incentive Reform and Extension Act of 2015.
"Today, one-third of petroleum used in the United States is imported from foreign countries and most of it is used to fuel our vehicles," Noem said in December when she announced the bill. "Especially with conflicts arising in energy-rich areas of our world, the need to decrease our reliance on foreign fuels grows every single day. A commitment to renewable fuels, like biodiesel which can be grown right here in America, is critical as we look to improve our security by becoming more energy independent."
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