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Congress votes to reinstate $1 per gallon biodiesel tax incentive

By The National Biodiesel Board | January 02, 2013

The U.S. biodiesel industry applauded Tuesday as the U.S. House cleared a year-end fiscal package that reinstates the biodiesel tax incentive for 2012 and 2013. President Obama is expected to quickly sign the bill into law.  

“It's been a long year with a lot of missed opportunity and lost jobs in the biodiesel industry,” said Anne Steckel, vice president of federal affairs for the National Biodiesel Board. “But we're pleased that Congress has finally approved an extension so that we can get production back on track. This is not an abstract issue. In the coming months, because of this decision, we'll begin to see real economic impacts with companies expanding production and hiring new employees.”

The biodiesel tax incentive expired on Dec. 31, 2011. A recent study found that the industry would have produced an additional 300 million gallons this year with the tax incentive in place. That would have supported some 19,213 additional jobs, for a total of 83,258 jobs supported by the industry nationwide, according to the study, conducted by Cardno ENTRIX, an international economics consulting firm. Looking to next year, the study found that the industry would support some 112,078 jobs nationally with the tax credit in place versus 81,977 without it. Additionally, the return of the incentive is projected to increase household income by some $1.6 billion next year while supporting an additional $3.1 billion in GDP.

Along with these economic benefits, Steckel emphasized that biodiesel is helping reduce America's dependence on imported petroleum and making us less vulnerable to global petroleum markets that continue to disrupt the economy and threaten our national security, while significantly reducing tailpipe pollution and greenhouse gas emissions.

“This is important not just for jobs but for diversifying our energy supplies, improving our energy security and reducing costly emissions,” Steckel said.

The $1-per-gallon biodiesel tax incentive was first implemented in 2005. Congress has allowed it to lapse twice, in 2010 and again in 2012. Under the legislation approved by the House on Tuesday and first passed by the Senate on Monday, the incentive will be reinstated retroactively to Jan. 1, 2012 and through the end of 2013.

Steckel thanked the industry's supporters on Capitol Hill for pressing for the incentive, particularly Sens. Maria Cantwell, D-Wash., and Charles Grassley, R-Iowa, and Reps. Aaron Schock, R-Ill.; and Collin Peterson, D-Minn.

Made from an increasingly diverse mix of resources such as recycled cooking oil, soybean oil and animal fats, biodiesel is a renewable, clean-burning diesel replacement that can be used in existing diesel engines without modification. It is the first and only commercial-scale fuel produced across the U.S. to meet the U.S. EPA’s definition as an advanced biofuel, meaning the agency has determined that it reduces greenhouse gas emissions by more than 50 percent when compared with petroleum diesel. The industry has plants in nearly every state in the country. NBB is the U.S. biodiesel trade association.

 

4 Responses

  1. Graydon Blair

    2013-01-02

    1

    The problem with this credit is that all the money it creates goes right from the commercial biodiesel producer into the hands of the organic oil industry in the form of higher oil prices to biodiesel plants. As of today, yellow grease is sitting between $0.34 & $0.365/lb (or $2.57/gal to $2.76/gal) I'm using the USDA Government Report as my source. http://www.ams.usda.gov/mnreports/lswagenergy.pdf Within 6 weeks, the new & used organic oils prices will simply go up by $1/gal negating any benefit this incentive created. It's happened every time the credit gets reinstated. In other words, the money gets handed to commercial biodiesel plants, who then have to hand it on over to the organic oil producers in the form of higher prices. Where's the benefit to the biodiesel industry? I just don't see it. However, Griffin, Darling, ADM, and other new & used organic oil producers will soon be sitting pretty! But last time I checked, they don't need the money. It's the commercial biodiesel industry that needs it but unfortunately won't be keeping it.

  2. Gordon Soderberg

    2013-01-02

    2

    I wonder if I could get a dollar for every gallon I made and used from waste vegetable oil to demonstrate sustainable energy solutions for disaster response?

  3. William Riley

    2013-01-03

    3

    Every bill passed by Congress has unintended consequences. In a capitalist society there are minds working on strategies to make more money for themsleves. It is called self interest.Nothing wrong with that but as government gets bigger with more regulations and ever expanding rules, you will see more of it.

  4. Larry Cox

    2013-01-03

    4

    Is this the same tax credit for producing renewable diesel fuels using Form 8864, or is it a different incentive? Does anyone know?

  5.  

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