The Senate Finance Committee has passed a tax extenders package that includes two-year extensions of tax credits for biodiesel, renewable diesel and cellulosic biofuels. The next step for the legislation is consideration by the full U.S. Senate, which has not yet been scheduled.

The bill would extend incentives for biodiesel and renewable diesel for two years, through 2016. The extension would apply to the $1-per-gallon credit for biodiesel and renewable diesel, and the 10-cent-per-gallon small agri-biodiesel producers credit.

“The biodiesel tax credit is an incredibly effective economic incentive that creates jobs at biodiesel plants across the country and strengthens America’s energy security while sharply reducing pollution,” said Anne Steckel, vice president of federal affairs for the National Biodiesel Board. “We want to thank the Senate Finance Committee for taking the lead on tax extenders and moving forward to reinstate these important provisions. We look forward to working with the committee as the proposal advances and urge leaders in both parties to treat these expired incentives with a sense of urgency. This is smart economic policy that pays tremendous dividends.”

The bill also contains a provision extending the $1.01 per gallon production tax credit for cellulosic biofuels, which expired at the end of last year. Under the legislation, the cellulosic biofuels producer tax credit would be extended for two years, through 2016.

During the hearing to address the extenders package, the committee accepted an amendment offered by Sen. Chuck Grassley, R-Iowa, to change the biodiesel fuels tax credit from a mixture credit to a production credit. During the hearing, Grassley explained that the amendment would help ensure the credit benefits only domestic biodiesel production and doesn’t subsidize imported biofuels. “It’s projected that imports from Argentina, Singapore, the European Union and South Korea could exceed 1 billion gallons in the years 2016 and 2017,” Grassley said, noting the tax incentive should not apply to these imported fuels. “By restricting the credit to domestic production, we’ll save tax payers money and reduce the cost of the extension by $90 million,” he continued.

“This is a common-sense reform that will save money by focusing the tax incentive on domestic production,” Steckel said. “It will also make it easier to administer the tax incentive and to prevent fraud by significantly narrowing the number or parties in the value chain who can claim the credit.”

The extenders package also includes a wide variety of other tax credit extensions, including a two-year extension of the renewable production tax credit. The credit can be claimed as a 2.3 cent per kWh tax credit for renewable electricity, or an alternative 30 percent investment tax credit. The credits, which expired at the end of last year, would be extended through the close of 2016.

In addition, the package includes a two-year extension of the special depreciation allowance for second-generation biofuel plant property and the alternative fuel mixture excise tax credit.