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The Cantwell-Grassley Biodiesel Tax Reform and Extension Legislation

A bill introduced by U.S. Sens. Cantwell and Grassley seeks to reform and extend the biodiesel tax credit.
By Ron Kotrba | August 12, 2009
U.S. Sens. Cantwell and Grassley recently introduced the Biodiesel Tax Incentive Reform and Extension Act, which would seek to extend the biodiesel tax credit for five years, plus switch it from being a blender credit to a producer credit. The former seems like it's a no brainer-who in the business would not want to pass a five-year extension rather than fighting every year for another one-year extension.

A tax credit lasting longer than one year is most definitely needed. Let's hope that change goes through. If any producers oppose that, I'd definitely be interested in hearing why.

Transitioning the credit from blender to producer may bring more debate. NBB says this change will focus the incentive on the domestic biodiesel industry, improve administration of the nation's tax laws and protect the integrity of the credit.

While this may be true, there are those who say perhaps this is not a good idea whether it's because of the additional paperwork that would be imposed on the producer in switching the credit away from the blender (in addition to the mounting accounting producers are required to keep for RINs, etc.), or because of the length of time it would take to receive compensation from the government.

As Biodiesel Magazine associate editor Nicholas Zeman writes in his web news story found in this week's Biodiesel Week newsletter, "The longer a producer has to wait to get paid, the more of its own capital it has to invest to maintain its inventory and procure feedstocks, which could be a problem imposed by a conversion of the credit."

What do you think?