Congress Leaves Biodiesel Producers Waiting for Tax Incentive

With such strong bipartisan support for the policy, it’s difficult to understand why Congress has allowed the biodiesel tax incentive to remain lapsed for so long. The National Biodiesel Board is emphasizing that rapid renewal is necessary.
By The National Biodiesel Board | October 07, 2019

The biodiesel industry has now waited 20 months for Congress to renew the biodiesel tax incentive. For some companies, the delay has become a crisis. Several producers stopped purchasing feedstocks, shut down plants and furloughed workers over the summer. NBB and its members continue to call Congress’ attention to the situation. Unfortunately, Congress has not set a firm timeline for renewing the tax policy.

In June, Rep. Mike Thompson, D-California, introduced the Taxpayer Certainty and Disaster Tax Relief Act of 2019. Among other things, the bill would extend the biodiesel tax incentive for 2018 through 2020. NBB encouraged members of the House ways and means committee to mark up and approve the legislation. The committee’s approval means the legislation can be voted on by the full House of Representatives at any time.

The full House, however, did not vote on the legislation. Congress also missed an opportunity to attach the biodiesel tax incentive renewal to a late July budget agreement, even as NBB and its members advocated for them to do so. Both the House and the Senate left Washington, D.C., for the summer without further action to renew the tax incentive.

In early July, Flint Hills Resources announced the closure of the Duonix Beatrice biodiesel plant in Nebraska, citing uncertainty over the tax credit as one of the primary reasons. Other large producers also announced plant closures or production cuts across the country, including REG in late July, World Energy in mid-August, and American GreenFuels in late August. More than 200 million gallons of production is impacted by the publicly announced closures, and more than 200 employees at the plants have been idled. Overall, the production loss impacts thousands of jobs throughout the industry.

NBB member companies met and worked with congressional champions throughout the summer to highlight the crisis facing the industry. Producers hosted roundtable meetings and plant tours with several of the lead sponsors of the Biodiesel Tax Credit Extension Act of 2019. That legislation, introduced by freshman legislator Rep. Abby Finkenauer, D-Iowa, now has 59 co-sponsors—including 35 Democrats and 24 Republicans.

With such strong bipartisan support for the policy, it’s difficult to understand why Congress has allowed the biodiesel tax incentive to remain lapsed for more than a year and a half. The credit is highly effective; the biodiesel industry has proven its ability to grow with support from the incentive.

NBB and its members continue to meet with and ask representatives and senators to make renewing the biodiesel tax incentive an urgent priority. NBB organized members to fly to Washington during the third week of September, soon after Congress returns from the summer break. NBB is emphasizing that rapid renewal is necessary to prevent additional plants from closing and long-term certainty can bring those that have closed back online.

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