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Retroactive tax break finds Senate approval

By TIM THORNBERRY
Kentucky Correspondent

WASHINGTON, D.C. — Remember the biodiesel tax credit extension Congress did not pass late last year? “Better late than never” is the attitude many in the biodiesel industry are taking, as the U.S. Senate passed its version in the American Workers, State and Business Relief Act.

The legislation includes the extension of the $1 per gallon tax credit and is to be retroactive to Jan. 1, lasting until Dec. 31.
Biodiesel proponents are shouting their approval, as many in the industry were looking at lost revenue and jobs as the result of the failure to pass it by the end of 2009. American Soybean Assoc. President Rob Joslin said failure to extend the credit has brought the industry to a halt.

“Expiration of the biodiesel tax incentive has essentially caused the production and use of biodiesel in the U.S. to cease, and has placed thousands of jobs currently supported by the domestic biodiesel industry in immediate jeopardy,” he said. “Companies have already started laying off employees, and this situation is certain to worsen the longer the tax incentive is allowed to lapse.”
But before a celebration can be planned, the bill must be reconciled with the House version passed in December. In order for the bill to make it to the president’s desk, both chambers must pass an identical bill and just when that will happen is not certain.

Work on health care reform legislation stalled the bill before, and that issue is still on the front burner in Congress, possibly for action this week. Joslin, a soybean producer from Sidney, Ohio, is hoping the reconciliation will happen sooner rather than later. “Congress should move quickly to seek agreement on a final bill that can be passed and signed into law as soon as possible,” he said.

Joslin also noted the “green” advantages of biodiesel use. “Biodiesel has the best energy balance and the best greenhouse gas reduction of any fuel that is currently in the commercial marketplace, and biodiesel is the only advanced biofuel that has reached commercialization in the United States,” he said.

“Biodiesel is a homegrown renewable fuel and an excellent way for America’s soybean growers to boost U.S. energy security, promote economic development and improve the environment.”

Iowa Soybean Assoc. President and farmer Delbert Christensen said the passage is good, but warned there is another hurdle. “We appreciate this important step in seeking reinstatement of the biodiesel tax credit,” he said. “Iowa soybean farmers have invested millions of dollars in helping create the biodiesel industry in Iowa, and this tax credit is vitally important to the viability of this industry.

“But we still have legislative work to do. This bill now needs to be reconciled with the House version.”

The lack of extension has already had repercussions in the biodiesel industry in Iowa, which has 15 biodiesel plants, many of which have stopped operations while others have slowed production to the point of layoffs. According to a study conducted by the United Soybean Board (USB), biodiesel adds at least 25 cents to the price of soybeans.

Christensen said the tax credit, coupled with the recently finalized federal Renewable Fuel Standard (RFS2) – which will increase the volume of renewable fuel required to be blended into transportation fuel to 36 billion gallons by 2022 – will help ensure strong demand for biodiesel for the remainder of the year.

Manning Feraci, National Biodiesel Board vice president of Federal Affairs, agreed the delay has been tough on the industry. “The lapse in the biodiesel tax credit has been extremely disruptive to the domestic biodiesel industry, and a retroactive extension of this worthwhile incentive will help America realize the job creation, energy security and environmental benefits associated with biodiesel,” he said.

“The NBB strongly encourages House and Senate to work quickly and get legislation retroactively extending the biodiesel incentive to the president’s desk for signature. Quick action will allow the nation to again reap the substantial benefits associated with a healthy domestic biodiesel industry,”

The tax incentive is designed to make biodiesel price competitive with conventional diesel fuel.

3/17/2010