By TIM THORNBERRY
Kentucky Correspondent

WASHINGTON, D.C. — The debate over biofuel incentives is continuing in Congress amid a flurry of activity that has seen new legislation in the House and Senate concerning biodiesel, along with somewhat confusing votes in the Senate on ethanol credits.

The Biodiesel Tax Incentive Reform and Extension Act (House Resolution 2238) was introduced last week Agriculture Committee Ranking Member Collin Peterson (D-Minn.) and Rep. Aaron Schock (R-Ill.), with a similar bill introduced in the Senate by Sen. Maria Cantwell (D-Wash.) and Sen. Chuck Grassley (R-Iowa).

At the heart of the issue is the blender’s tax credit for refiners, something its opponents say is no longer needed especially with massive budget cuts looming. Proponents contend it is needed to keep the industry growing and jobs intact. The House legislation would extend the $1 per-gallon biodiesel tax credit to 2014 and change the tax incentive to a production excise tax credit, according to information from the committee.

Tax credits were allowed to expire in late 2009 after the Senate failed to act on a bill that would have kept them alive. That inaction led to lower biodiesel production and layoffs in the industry; however, those credits were resurrected late last year for a one-year time frame.

“Increasing the production of renewable energy is vital to creating jobs and growing our rural economies. Unfortunately, by allowing the biodiesel tax credit to lapse, we’ve already witnessed a loss of jobs and production,” Peterson said. “The biodiesel industry is still developing and, with the certainty of the biodiesel tax credit, we can continue to move forward and fully realize our renewable energy potential.”

Cantwell said the credit should be extended, for a variety of reasons. “Today’s high gas and diesel prices are slowing our economic recovery and burdening families,” she said. “For economic reasons, national security reasons and environmental reasons, we must continue to invest in America’s clean energy economy.

“Biodiesel is America’s first advanced biofuel; it can be made from a variety of feedstocks and is less polluting than today’s petroleum-based diesel fuel. This bipartisan bill is smart federal policy because it is helping launch a nascent, domestically-based industry, reforms an existing credit to make sure it supports American biodiesel producers and provides the industry the certainty it needs to continue to grow.”

While the intent of both bills was relatively clear concerning the biodiesel tax credit, the Senate action on ethanol credits was anything but clear after conflicting votes that took place two weeks ago. The chamber first voted to continue the incentives, only to change its mind two days later. But, this legislation could prove to be symbolic at best without support from the House.
The Renewable Fuels Association (RFA) referred to this ambiguous environment as a “cauldron of confusion.” RFA President and CEO Bob Dinneen wrote in a blog post: “At the end of a crazy week, it is more clear than ever that the Senate needs and the public will demand a more thoughtful and comprehensive discussion about ethanol and energy policy.”

What it means to farmers

Whether the demand created by the biofuel industry is solely responsible for the increase in current grain market prices is open for discussion but one thing for sure: Prices for corn and soybeans are good and farmers want to take advantage of it.

The projected soybean crop in Kentucky alone is the largest in years and nationally, corn is expected to see an estimated harvest of 13.2 billon bushels, according to USDA data; this, in spite of regional flooding that has reduced the number of intended planted acres.

Ethanol is getting a major boost in the public’s eye lately as NASCAR has partnered with a host of organizations to use blended fuel in the top three racing series, as part of its green initiative. Mike Lynch, NASCAR’s managing director of green innovation, said the whole effort is a centerpiece of what NASCAR’s ‘green’ initiative is all about, according to a press release from Growth Energy, one of the partners in the program.

In one of the commercials supporting the initiative and showcasing the connection between producers and NASCAR, tractor-driving farmers are shown making their way to a racetrack.

But what corn is to ethanol, soybeans are to biodiesel, and the National Biodiesel Board (NBB) recently announced the U.S. biodiesel industry is launching its “largest ever public outreach effort.” The multimillion-dollar campaign will include a presence on television, radio, in print advertisements and online.

“The public generally doesn’t know that there is an advanced biofuel here now,” said Joe Jobe, NBB CEO. “This is not some pipe dream. Biodiesel today is fueling long-haul trucks from Florida to California, municipal buses in Texas, Ford pickups in Detroit and Volkswagens in New York City.”

While the public is and will be hearing more about biofuel in the near future, grower representatives are weighing in on the most recent action in Washington. The American Soybean Assoc. applauded the biodiesel tax incentive bills, while the National Corn Growers Assoc. (NCGA) decried the Senate’s action.