Congress is jeopardizing continued growth and job creation in the U.S. biodiesel industry by allowing a key tax incentive to lapse at year’s end, U.S. biodiesel representatives said in a letter to Congressional leaders. 

The $1 per gallon biodiesel tax incentive is slated to expire on Dec. 31, even as lucrative tax breaks for the petroleum industry will continue. The biodiesel incentive also expired in 2010 and 2012.

“This marks the third time in five years that this incentive will have expired,” Anne Steckel, vice president of federal affairs at the National Biodiesel Board, wrote in the letter. “The uncertainty this creates is a major reason why we are still so dependent on petroleum. It is incredibly disruptive, not just to biodiesel plants across the country but also to our bipartisan goals of creating jobs in new domestic energy industries and boosting our energy security by diversifying our fuel supplies.”

“Biodiesel producers, many of them small companies, are reluctant to add new jobs when there is a strong likelihood that the incentive will disappear,” the letter continues. “Many are forced to cut back production when the incentive expires, causing job losses and even plant closures.”

Steckel added that NBB is pleased to see the ongoing discussion around tax reform but urged the lawmakers to not hold up tax extenders while those long-term negotiations continue.

Biodiesel—made from a diverse mix of resources such as recycled cooking oil, soybean oil and animal fats—is the first EPA-designated advanced biofuel to reach commercial-scale production nationwide. It has exceeded 1 billion gallons of annual production in each of the past three years, and this year is on track to reach a record of 1.7 billion gallons.

In addition to the pending expiration of the tax incentive, the industry also is fighting against a weak renewable fuel standard (RFS) proposal from the EPA, which recently proposed limiting biodiesel volumes under the RFS to 1.28 billion gallons for the next two years.

“Either one of these setbacks is bad enough, but taken together, we’re looking at significant contraction in this industry in which plants will close and thousands of people could lose their jobs,” Steckel said.

Biodiesel is the first and only commercial-scale fuel produced across the U.S. to meet the EPA’s definition as an advanced biofuel—meaning the EPA has determined that it reduces greenhouse gas emissions by more than 50 percent when compared with petroleum diesel. Produced in nearly every state in the country, the industry has exceeded RFS requirements in every year of the program, producing more than 1 billion gallons annually since 2011. It is on pace to produce at least 1.7 billion gallons in 2013, supporting more than 62,000 jobs nationwide