Biodiesel Industry Appeals for Continued Tax Credit

Biodiesel leaders willing to see long-term reform in return for short term extension.

Published on: Dec 15, 2011

During a hearing Wednesday, representatives of the U.S. biodiesel industry urged the Senate to pass a seamless extension of the biodiesel tax incentive to avoid putting thousands of jobs at risk. Anne Steckel, vice president of federal affairs at the National Biodiesel Board, said that this tax incentive is a job creator, and Congress will be putting jobs in jeopardy if it adjourns without passing an extension.

Texas-based Renewable Biofuels, Inc President and CEO Paul Soanes, testifying for the National Biodiesel Board, told a Senate Finance Subcommittee his industry could live with long-term reductions in the dollar-a-gallon blender's credit expiring this month, as long as a short-term extension was passed.

"We do need the credit to be extended for a short period of time to provide the certainty for customers to invest in necessary infrastructure, to make biodiesel part of their energy mix," Soanes said. "At that point in time biodiesel will stand on its own and be very competitive as a new domestic energy source for this nation."

Soanes stressed his industry's turnaround since the reinstatement of the tax break after it was allowed to expire in 2010, when dozens of biodiesel plants closed and thousands lost jobs. The industry set a new production record this year through October at just over 800 million gallons, which was more than double last year's figure.

Soanes said the constant whiplash of year-to-year biodiesel tax extensions and the boom and bust cycle is very difficult on the industry, which is why he says his industry is seeking market certainty with a long-term extension. He noted biodiesel is not as mature an industry as corn ethanol, which with other biofuels, is not expected to win tax credit renewal after this year.

"The biodiesel industry is a young industry and in any young industry needs two components to succeed; it needs some degree of market certainty and some degree of price certainty," Soanes said. "The current regulations provide that. You have the RFS2 providing market certainty and the pricing certainty comes from the blender's tax credit."

Bipartisan House and Senate bills would extend the dollar blender's credit for three years. The tax break could be made retroactive to Jan. 1 if it's extended in the new year.