$1 Per Gallon Tax Credit Helps Venture Produce Biodiesel from Animal Fats

Tyson and ConocoPhillips say the venture helps diversify renewable fuel sources, but the National Biodiesel Board takes issue with this interpretation of the biodiesel tax break.

Published on: Apr 16, 2007

The world's largest protein producer is partnering with an energy company in a venture that would produce biodiesel from animal fats - with help from a $1 per gallon biodiesel tax credit.

Tyson and ConocoPhillips expect annual production to reach 175 million gallons over 18 months, using beef, pork and poultry byproduct fat. Tyson president and CEO Dick Bond, who has voiced concerns about rising feed prices due to ethanol's demand for corn, calls the venture a "win-win" situation because it would diversify biofuel feedstocks away from corn.

Late this afternoon the National Biodiesel Board held a press conference voicing concerns about the announcement. NBB CEO Joe Jobe said the organization is concerned that large-integrated refineries can blend in small percentages of vegetable oil without adding to the refinery capacity and then bill the government to receive the $1 per gallon tax credit. NBB fears the loophole would discourage renewable fuel development.

Jobe says "it is bad public policy" to pay $1 per gallon to subsidize existing production - a loophole he fears will cost taxpayers and "stall the progress that the biodiesel industry has made."

In addition, the resulting fuel does not contain any oxygen, unlike cleaner-burning biodiesel, and does not offer the same benefits of biodiesel in terms of being non-toxic, biodegradable, increasing fuel lubricity, and significantly reducing harmful particulate matter emissions from diesel engines, NBB said.