An important tax incentive on biodiesel is about to expire, and the National Biodiesel Board is scrambling to get it renewed.

Biodiesel Magazine reports that the NBB is lobbying lawmakers to renew the $1-per-gallon biodiesel tax incentive, which encourages biodiesel use by making it competitive with petroleum diesel fuel. NBB argues that if the incentive is allowed to expire on December 31, 2009, biodiesel will become cost prohibitive, and domestic production and use of the green fuel will end:

“The biodiesel tax incentive is working. Since its enactment in 2004, U.S. biodiesel production has reached commercial scale, and the nation has realized the job creation, environmental and energy security benefits that come with the expanded production and use of biodiesel,” stated Manning Feraci, NBB’s vice president of federal affairs. “These benefits will simply be lost if the credit lapses.”

During visits with lawmakers, biodiesel industry leaders expressed strong support for S. 1589, the Biodiesel Tax Incentive Reform and Extension of Act, introduced by Senators Maria Cantwell (D-WA) and Charles Grassley (R-IA), and H.R. 4070, companion legislation introduced yesterday by Representatives Earl Pomeroy (D-ND) and John Shimkus (R-IL). This legislation would reform the biodiesel tax incentive by changing the current blenders excise tax credit to a production excise tax credit. This will improve administration of the incentive, eliminate potential abuses and improve tax compliance. The proposals would also extend the biodiesel tax incentive for five years, providing the certainty entrepreneurs need to create jobs and expand the use of biodiesel.

The NBB also points out that biodiesel fits with the Obama Administration’s policy of creating green jobs, while cutting carbon emissions.