Bill intro'd to reform, extend biodiesel tax credit through 2019

By Ron Kotrba | May 16, 2016

Legislation was introduced May 13 by Reps. Kristi Noem, R-S.D., and Bill Pascrell, D-N.J., to extend the biodiesel tax incentive through 2019 and reform it as a domestic production credit. Biodiesel supporters have long sought a multiyear extension of the credit to foster investment in the industry, and to avoid the on-again, off-again scenario the sector has experienced with the tax credit since 2010, when it first expired. Also, for more than a decade, the federal tax incentive has been a credit collected by blenders, but a strong movement to convert it to a producers credit made headway in Congress last year. The National Biodiesel Board has been leading the charge to reform the incentive to a producers credit in order to curtail subsidization of foreign biodiesel production. The measure was ultimately defeated but NBB vowed to continue the fight this year.

“While oil tax breaks remain permanently written into the tax code, the biodiesel tax incentive is yet again set to expire in less than eight months,” said NBB Vice President of Federal Affairs Anne Steckel. “This is no way to do business. Biodiesel producers need stable, predictable tax policy to continue to grow and hire. We want to thank Reps. Noem and Pascrell for taking the lead on this issue to create that stability and spur economic activity.”

Steckel added, “Incentivizing foreign biodiesel production was never the intent of this incentive, and Congress should reform it immediately.” She said reforming the blenders credit to a producers incentive “would not only reduce the cost of the tax incentive to the treasury, but it would level the playing field for American producers who are now competing against predatory imports that are getting subsidies in their country of origin only to be shipped to the U.S. to receive another incentive from American taxpayers.”

Biodiesel producers outside the U.S. are increasingly taking advantage of the incentive by shipping their product to U.S. shores. In 2015, approximately 670 million gallons of biodiesel was imported to the U.S., comprising roughly one-third of the U.S. market.

“The bill from Reps. Noem and Pascrell is something the American Soybean Association is extremely pleased to see, as it seeks to extend the biodiesel tax credit through 2019, and restructures the credit to further promote value-added domestic production,” said Richard Wilkins, ASA president and Delaware farmer. “If not renewed, the $1-per-gallon credit will expire at the end of this year putting a damper on production and preventing the industry from maximizing the benefits provided from this domestic, renewable energy source. In a farm economy that is dealing with low crop prices, that uncertainty and added stress are things that farmers don’t need.”

Wilkins added, “In the challenging political environment of an election year, it may be easier for lawmakers to pull back from working together, even on common-sense legislation like this, which is what makes the leadership shown by Reps. Noem and Pascrell so commendable. We appreciate their work on this issue and we urge Congress to support the extension and restructuring of the biodiesel tax credit.”

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