U.S. Representatives Kristi Noem (R-SD) and Bill Pascrell (D-NJ) have introduced legislation to extend the biodiesel tax incentive through 2019 and modify the program to become a domestic production credit. The $1-per-gallon biodiesel tax credit has been lapsed and reinstated multiple times. It is scheduled to expire yet again on December 31, 2016. This bill would extend the incentive three years while also changing its focus to support domestically produced biodiesel.
“While oil tax breaks remain permanently written into the tax code, the biodiesel tax incentive is yet again set to expire in less than eight months,” said National Biodiesel Board (NBB) Vice President of Federal Affairs Anne Steckel in response to the introduction of the bill. “This is no way to do business. Biodiesel producers need stable, predictable tax policy to continue to grow and hire. We want to thank Reps. Noem and Pascrell for taking the lead on this issue to create that stability and spur economic activity.”
According to NBB, foreign biodiesel imported to the U.S. and then blended with petroleum diesel is eligible for the tax incentive. As a result, more foreign biodiesel producers are taking advantage of the tax credit by shipping their biodiesel to the states. Today imported biodiesel makes up nearly a third of the U.S. market, around 670 million gallons.
“In addition to extending the incentive, this bill includes an important reform ensuring that this tax incentive is directed toward domestically produced biodiesel,” added Steckel. “This would not only reduce the cost of the tax incentive to the Treasury, but it would level the playing field for American producers who are now competing against predatory imports that are getting subsidies in their country of origin only to be shipped to the U.S. to receive another incentive from American taxpayers. Incentivizing foreign biodiesel production was never the intent of this incentive, and Congress should reform it immediately.”
The American Soybean Association (ASA) also commended Reps Noem and Pascrell for the introduction of the legislation. Also calling out the need for long-term policy to keep the industry strong, President and Delaware farmer Richard Wilkins also noted that uncertainty not only negatively affects industry investment, but hurts farmers.
“In a farm economy that is dealing with low crop prices, that uncertainty and added stress are things that farmers don’t need. In the challenging political environment of an election year, it may be easier for lawmakers to pull back from working together, even on common-sense legislation like this, which is what makes the leadership shown by Representatives Noem and Pascrell so commendable.” Wilkens concluded, “We appreciate their work on this issue and we urge Congress to support the extension and restructuring of the biodiesel tax credit.”