Grassley Q&A: Looking forward with biodiesel

By Office of Sen. Chuck Grassley | July 12, 2011

Q.  Why do you support the production of biodiesel?

A.  Too much of America’s energy comes from fossil fuels imported from countries that don’t like us.  We can reduce dependence on foreign oil, and be better off economically, environmentally, and geopolitically, by encouraging domestic production of renewable, clean-burning biodiesel.  In 2004, Congress passed the biodiesel tax incentive that I sponsored as Chairman of the Senate Finance Committee to encourage the production and use of biodiesel.  Biodiesel production in the United States increased from 25 million gallons in 2004, to 700 million gallons in 2008.  When Congress allowed the tax credit to lapse in 2009, nearly 8,900 jobs were wiped out, many in Iowa.  Thankfully, in December 2010, the credit was restored retroactively through December 2011. 

Q.  What can be done to encourage the production of biodiesel? 

A.  I’ve introduced legislation with Senator Maria Cantwell of Washington that would extend through 2014 the $1 per gallon tax for biodiesel.  And, the bill would help small producers by maintaining the additional 10 cent credit for the first 15 million gallons of biodiesel created by producers with an annual production capacity of less than 60 million gallons.  Fourteen of Iowa’s 15 biodiesel plants fall into that category.

Q.  Can abuse of the credit be prevented? 

A.  The bill would eliminate potential abuses by changing the incentive from a blender credit to a production tax credit.  This change would gear the credit toward producers who create clean biodiesel, rather than for the blending of biodiesel with petroleum diesel.  By focusing the credit on production, we’ll further reduce potential abuses of foreign fuel passing through the U.S. to claim the blender’s credit.  

Q.  What affect will extension of the biodiesel tax credit have on jobs and the economy?

A.  A study by an international consulting firm found that if Congress does not extend the tax credit, consumers would be forced to spend an additional $6.6 billion for diesel fuel between 2012 and 2015.  But, with the right incentives, by 2015, biodiesel production could replace 1.9 billion gallons of imported diesel fuel, support more than 74,000 jobs, and generate $4 billion in income and approximately $7.3 billion in gross domestic product.


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