By Ron Kotrba | January 06, 2015

The U.S. biodiesel industry received a bittersweet gift from Congress a week before Christmas when it reinstated the $1 per gallon biodiesel tax credit. Last year, the industry waited and waited, and waited some more for EPA to finalize biomass-based diesel volumes under the renewable fuel standard (RFS), and for Congress to act on the tax credit reinstatement. Toward the end of the year, EPA finally said it was holding off until 2015 to issue RFS volumes for 2014—an absurdity, no doubt. Then, in December, Congress passed the tax extenders package reinstating the tax credit—for 2014 only.

The action is sweet because those in the industry entitled to the credit will receive a sum totaling well over $1 billion, constituting a significant cash injection. The gift is bitter for several reasons. The obvious reasons are the credit wasn’t extended forward, only backwards. Efforts to renew the tax credit will occupy the collective minds of this industry and the National Biodiesel Board into the new year—once again. Dec. 31 was the fourth time this incentive expired. It had been renewed three times, with the third time being the first time it was renewed only retroactively.

If the government is going to spend the money anyway, why wouldn’t it do it in such a way that fosters domestic, renewable energy production and job growth while reducing emissions and dependence on foreign oil and dirty, finite fossil fuels in general? The same can be said for the EPA—they must finalize the RFS rule, so why not do it in a time frame that allows obligated parties to fulfill their requirements and give the renewable fuel producers a stable, predictable trajectory that will attract investment and foster growth?

It’s not just the biodiesel industry that benefits from a tax credit and RFS that is in play and predictable. Oil companies that blend biodiesel benefit from the dollar, and EPA’s delay baffled and concerned them just as much as it did those in the biodiesel space. Despite all of the uncertainty producers endured in 2014, the year was a decent one in terms of production volumes and sector activity. However, this pattern of backward-looking policymaking is stifling investment and putting a slow, painful squeeze on this industry in ways we have yet to fully realize.

Author: Ron Kotrba
Biodiesel Magazine
[email protected]

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