The National Biodiesel Board (NBB) is reinforcing the need once again for the biodiesel tax incentive. On behalf of America’s biodiesel producers, the association sent a letter to House and Senate tax committee leaders urging the extension of the incentive prior to its expiration on December 31, 2016.
“We strongly urge you to extend the biodiesel tax credit and take this opportunity to make a simple, common-sense reform by focusing the credit on U.S. production,” said Donnell Rehagen, Interim NBB CEO in the letter. “Legislation pending before Congress – S. 3188 and H.R. 5240 – would accomplish these objectives by extending the incentive through 2019 and changing it from a blender’s credit to a domestic producer’s credit. The legislation has strong support from American biodiesel producers and strong bipartisan support in both the House and Senate – reflected last year when a similar proposal passed the Senate Finance Committee.”
As noted by NBB, the growth of the industry has provided many benefits including reducing emissions, strengthening energy security, creating jobs and economic activity. Today the biodiesel industry supports nearly 48,000 U.S. jobs and $1.9 billion in wages.
The letter continued, “Many biodiesel producers who are now poised to expand and hire would likely cut jobs and production. Congress can avoid this with a long-term extension giving producers the policy stability they need to plan for the future.”
According to NBB, there are more than 1.5 billion gallons of unused production capacity that stands ready to be utilized under the right policy framework. Mobilizing that capacity would create thousands of jobs and billions of dollars in economic activity. Additionally, reforming the incentive would save the Treasury some $90 million as imports are reduced and domestic production rises, according to the Joint Committee on Taxation.
As noted in a previous post, 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. More than ever, 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, a version of the biodiesel tax incentive would eliminate the ability for foreign produced biodiesel to be eligible for the tax credit.