JEFFERSON CITY, Mo. — The National Biodiesel Board (NBB) and the American Soybean Assoc. (ASA) are backing separate bipartisan bills that would reform the biodiesel tax credit.

 

On May 5, the NBB applauded the introduction of a biodiesel tax credit bill in the U.S. House that would convert the blender’s credit to a $1 per-gallon production credit for fuels produced in the United States for 2017-20.

 

The House bill, led by Reps. Kristi Noem (R-S.D.) and Bill Pascrell (D.-N.J.) provides an additional 10-cent per-gallon credit for small-scale U.S. biodiesel producers. Companion legislation was recently introduced in the Senate by Sens. Chuck Grassley (R-Iowa) and Maria Cantwell (D-Wash.).

 

“We are thrilled to see momentum building in both chambers of Congress for this important tax reform,” said Anne Steckel, NBB vice president of federal affairs. “It is long overdue to close this loophole and better align the incentive with Congress’ intent – to invest American taxpayer dollars to spur job creation here at home. We look forward to working with Congress to move this proposal forward.”

 

On April 26, Grassley, Cantwell and 14 other senators introduced the American Renewable Fuel and Job Creation Act of 2017, which Ron Moore, ASA president and Roseville, Ill., soybean farmer, said allows producers the security they need to grow their operations, and shouldhelp to continue biodiesel’s success in diversifying the fuel market.

 

“This tax credit and extension is vital to the industry’s continued growth, and will maximize the added value of domestic production of biofuel,” he said. 

 

 Joining Grassley and Cantwell as cosponsors are Pat Roberts (R-Kan.), Heidi Heitkamp (D-N.D.), John Thune (R-S.D.), Sheldon Whitehouse (D-R.I.), Martin Heinrich and Tom Udall (D-N.M.), Joni Ernst (R-Iowa), Joe Donnelly (D-Ind.), Roy Blunt (R-Mo.), Mazie Hirono (D-Hawaii), Al Franken and Amy Klobuchar (D-Minn.), Patty Murray (D-Wash.) and Jeanne Shaheen (D-N.H.).

 

According to the ASA, biodiesel production – in addition to providing a clean fuel alternative – benefits soybean farmers and the livestock industry. About half of U.S. biodiesel is produced from soy oil that is a byproduct of soybean production, which is driven by demand for protein meal.

 

The senators said switching from a blender’s credit to a producer’s credit would offer numerous additional benefits. “The blender’s credit can be difficult to administer because the blending of the fuel can occur at many different stages of the fuel distribution,” a Grassley office statement read. “This can make it difficult to ensure that only fuel that qualifies for the credit claims the incentive, making the program susceptible to abuse.”

 The senators said modifying the credit is estimated to have little to no impact on the consumer. Much of the credit would continue to be passed on to the blender and, ultimately, the consumer.

 

Currently, the U.S. biodiesel industry is operating at approximately 65 percent of capacity. It has the capacity and access to affordable feedstocks to meet the demand of U.S. consumers, the senators said.

 

Under the Senate bill, the clean-fuel incentive would be extended for three years, transferring the credit from blenders to producers of the biofuel. Grassley said, “The switch ensures the tax credit incentivizes domestic production and taxpayers aren’t subsidizing imported fuel.”

 In 2005, Congress created the biodiesel tax incentive. As a result of that, the Renewable Fuel Standard (RFS) and consumer interest, biodiesel is providing significant benefits to the nation, he added.

 According to Grassley’s office, “Domestic biodiesel production supports tens of thousands of jobs. Replacing traditional diesel with biodiesel reduces emissions and creates cleaner air.

 “Homegrown biodiesel improves U.S. energy security by diversifying transportation fuels and reducing dependence on foreign oil. Biodiesel itself is a diverse fuel that can be produced from a wide array of resources such as recycled cooking oil, soybean and other plant oils and animal fats.”

 

Since 2014, biofuel imports have increased from 510 million gallons to about 1 billion gallons, in 2016. Already in the first quarter of 2017, imports are10 percent higher than they were by this time last year.

 Grassley said foreign biodiesel benefits both from the existing tax credit and from additional foreign subsidies, which makes it difficult for domestic biodiesel facilities to compete. In 2015 alone, the U.S. Treasury spent more than $600 million on tax credits for imported biodiesel and renewable diesel; the bill will help the industry grow to its full potential, he said.

 

“U.S. tax policy should support U.S. products and U.S. jobs,” Grassley said. “This bipartisan bill would end a system  that gives many foreign producers a legup over U.S. producers and give certainty to the biodiesel industry, which is responsible for employing thousands of Americans.

 

“U.S. producers shouldn’t be put at a disadvantage by foreign producers that in many cases are double-dipping by benefiting from U.S. tax incentives on top of their own significant government subsidies. These reforms supporting domestic producers would also save U.S. taxpayers money.”

 

Cantwell said, “The biodiesel tax credit already has a track record of reducing emissions, creating 50,000 jobs and greening our economy, removing the equivalent of 16 million cars from the road.

 

“This legislation will remove millions more cars while promoting energy independence, saving taxpayer dollars and accelerating by up to 45 percent the creation of new clean energy jobs in the domestic biodiesel production industry.”