WASHINGTON, July 21, 2016 - Sen. Chuck Grassley, R-Iowa, and 13 co-sponsors have introduced a bill that would modify the $1 per gallon biodiesel blenders’ tax credit to a domestic producers’ credit and extend it for three years.
After being reinstated in late 2015, the federal biodiesel tax incentive is set to expire again on Dec. 31. Under the current “blender’s” structure, foreign biodiesel imported to the U.S. and blended with petroleum diesel in the U.S. is eligible for the tax incentive. The Biodiesel Tax Incentive Reform and Extension Act of 2016 would extend the new policy for three years, starting Jan. 1, 2017.
The Iowa Renewable Fuels Association (IRFA) says the extension and modification is crucial to energy security and protecting American jobs.
Iowa’s renewable fuels industry accounts for more than $4.6 billion of the state’s GDP, generates $2.3 billion in income for Iowa households and supports more than 43,000 jobs throughout all sectors of the Iowa economy, says the IRFA.
IRFA notes that Iowa is the nation’s leader in renewable fuels production, having 12 biodiesel facilities that together can produce more than 315 million gallons annually. In addition, IRFA says that Iowa has 43 ethanol refineries capable of producing 4 billion gallons a year, including nearly 55 million gallons of cellulosic ethanol.
Monte Shaw, IRFA executive director, applauded supporters of the bill. He also expressed concern about the possibility that U.S. biodiesel production could decrease this year, citing the latest Department of Commerce report showing a surge in biodiesel imports. Those imports reached a two-and-a-half-year high in May and currently make up about one-third of the U.S. biodiesel market.
Shaw says that these soaring imports, coupled with the EPA’s “lackluster” Renewable Fuel Standard proposal, demonstrate the need to modify the credit to a domestic producers’ incentive to provide some longer-term certainty for the U.S. biodiesel industry.
“We applaud Sen. Grassley for leading the charge, and his colleagues, like Sen. Joni Ernst (R-Iowa), for working on this common-sense modification and extension that will support American jobs and energy security,” says Shaw.
The National Biodiesel Board (NBB) also applauded the bill, saying the legislation would fix the loophole that incentivizes foreign fuel. The NBB says that, increasingly, foreign biodiesel producers are taking advantage of the incentive by shipping their product here. By applying the tax incentive only to domestic biodiesel production, NBB says that the growing practice of foreign producers taking advantage of the U.S. tax system will end.
NBB urged Congress to take up the bill and pass it as quickly as possible to give domestic producers the certainty they need to hire and expand in the coming years. The group says the bill would bolster the diversification of the diesel market, reduce U.S. dependence on petroleum and help cut carbon emissions.
“Biodiesel and renewable diesel producers around the country are yet again facing what effectively amounts to a tax increase in less than six months,” says NBB. “Congress can keep that from happening by passing this bill. It will give producers the certainty they need to hire and grow in the coming years.”
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