A crucial tax break for the biodiesel industry has passed the U.S. House but is still a ways from being renewed.

The Hill.com reports that the $1-per-gallon tax credit for biodiesel, set to expire in just a few weeks on Dec. 31, won House approval, 241-181, but the $31 billion package still must make it through the U.S. Senate. The approval comes on the heels of the National Biodiesel Board’s warning that letting the incentive die would be disastrous for an already troubled industry.

The report notes that the industry is already producing far below its capacity, and has been hit hard by volatile commodity prices and weakened fuel demand caused by the economic downturn.

Total sales this year are projected to be 31 percent below 2008 levels, the trade group said. “Elimination of the tax credit will essentially erase all profitability in the biodiesel industry leading to a complete decline in output, expenditures, and jobs,” the report states.

You can read the NBB’s report here.