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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