Senators Chuck Grassley (R-Iowa) and Maria Cantwell (D-Wash) plus 12 co-sponsors have introduced legislation to extend the biodiesel tax incentive through 2019 that is set to expire at the end of this year. The bill would also reform the tax credit to apply only to domestically produced biodiesel. The bill follows similar legislation Sens. Grassley and Cantwell previously introduced, including last year when it cleared the Senate Finance Committee without objection. It also mirrors House legislation (H.R. 5240) introduced by Reps. Kristi Noem (R-S.D.) and Bill Pascrell (D-N.J.).
The biodiesel tax credit has been the victim over the years of inconsistent support. The incentive expired on December 31, 2014, then was retroactively reinstated late in 2015 and is again set to expire on December 31 2016. According to the National Biodiesel Board (NBB), under the current “blender’s” structure of the incentive, foreign biodiesel imported to the U.S. and blended with petroleum diesel in the U.S. is eligible for the tax incentive. Increasingly, foreign biodiesel producers are taking advantage of the U.S. incentive by shipping their product here. In 2015 alone, some 670 million gallons of biodiesel and renewable diesel was imported to the U.S., making up nearly a third of the U.S. market.
However, the new bill would eliminate the credit for foreign produced biodiesel and push the expiration date out three years, rather than the one year extensions that have been historically passed giving the biodiesel industry, especially investors, more certainty.
NBB Vice President of Federal Affairs Anne Steckel released the following statement in response to the legislation:
“Biodiesel and renewable diesel producers around the country are yet again facing what effectively amounts to a tax increase in less than six months. Congress can keep that from happening by passing this bill. It will give producers the certainty they need to hire and grow in the coming years. It will continue our success in diversifying the diesel market and reducing our dependence on petroleum. And it will help clean the air by cutting carbon emissions and other pollution.
It also will appropriately reform this incentive by applying it only to domestic biodiesel production, ending a growing practice where foreign producers are taking advantage of our tax system. Our tax law should not be incentivizing foreign fuel, and this bill fixes that loophole so that we’re stimulating jobs and economic development here at home.
On behalf of biodiesel and renewable diesel producers across the country, we want to thank Sens. Chuck Grassley, R-Iowa, and Maria Cantwell, D-Wash., for their continued leadership on this issue as well as the additional cosponsors, Sens. Roy Blunt (R-Mo.), Joe Donnelly (D-Ind.), Joni Ernst (R-Iowa), Al Franken (D-Minn.), Martin Heinrich (D-N.M.), Heidi Heitkamp (D-N.D.), Mazie Hirono (D-Hawaii), Mark Kirk (R-Ill.), Patty Murray (D-Wash.), Pat Roberts (R-Kan.), John Thune (R-S.D.) and Sheldon Whitehouse (D-R.I.). We urge Congress to take up this bill and pass it as quickly as possible so that we can continue expanding biodiesel’s role as the leading Advanced Biofuels in America.”