Biodiesel Makers Worry About Hit During Tax Break Wait

John Davis

USCapitolBiodiesel producers are worried the wait for the renewal … or even worse, the failure of renewal … of a crucial tax credit, set to expire in just more than a month, could be a death knell for the industry.

The Houston Chronicle reports that despite efforts already underway in the U.S. House and Senate to renew the $1 per gallon biodiesel tax credit, lawmakers don’t seem to be moving this measure to the forefront:

Losing the biodiesel tax incentive would be another blow to an industry that has closed many plants this year and slashed jobs amid rising costs of raw materials, weak domestic demand and on-again, off-again backing from the government.

“It would be devastating for the national and the Texas biodiesel industries,” said Jeffrey Trucksess, a consultant to Green Earth Fuels, which is operating a 90-million- gallon-per-year biodiesel plant below capacity at the Houston Ship Channel…

Today, U.S. biodiesel plants have the capacity to produce about 2.5 billion gallons a year of the fuel. Yet more than half of that plant capacity is sitting idle amid uncertainty on several fronts…

Texas, the biggest bio-diesel producing state, with 726 million gallons per year of capacity across 31 plants, has taken a hit from the industry’s troubles, said Jess Hewitt, president of the Bio-diesel Coalition of Texas.

Nearly half of the state’s plants are idle, along with their work forces, and plants that still operating are producing at reduced levels, he said. Last week, Sen. John Cornyn, R-Texas, said in a letter to the leadership of the Senate Finance Committee that the tax credit is “vital” to the Texas companies that use it.

Meanwhile, biodiesel producers in Texas have been left waiting and wondering.

“Every day that policy doesn’t get passed hurts us,” said Jenny Leonard, vice president and co-founder of Galveston Bay Biodiesel, whose 36-million-gallon-a-year plant is serving out existing contracts but, like the rest of the industry, has struggled to win new business for 2010.

So what’s been holding up this important legislation that would help the industry … and would surely help the nation’s 10+ percent unemployment? Of course, lawmakers are locked on health care reform and, ironically, climate change legislation.

Biodiesel, Government, Legislation