Current law provides for a tax credit for blending biodiesel with petroleum diesel fuel. That law will expire at the end of this year unless a bill introduced by Senator Chuck Grassley, R-Iowa, is passed. The Biodiesel Tax Incentive Reform and Extension Act of 2009, according to Grassley, would provide predictability to investors and producers so the United States can continue moving forward to displace imported fossil fuels with low carbon, renewable biodiesel. The new legislation simplifies the tax credit for producers and the law would be extended for five years.
Grassley, ranking member of the Senate Finance Committee, which has jurisdiction over tax policy, authored the original biodiesel tax incentive law when he was committee chairman in 2004. Grassley said U.S. production of biodiesel has increased significantly in recent years, and the legislation will encourage that progress. He said, "The more we can encourage domestic production and meet demand the better off we'll be economically, environmentally, and geopolitically."
Across the nation there are 176 plants in operation with the capacity to produce more than 2.61 billion gallons of biodiesel, and 39 new plants are under construction or expansion. According to the National Biodiesel Board, limited access to capital, uncertainty surrounding the federal commitment to biodiesel and the current state of the economy threaten to undermine the progress the U.S. biodiesel industry has made to build the production capacity and infrastructure needed to displace petroleum diesel fuel with renewable, low-carbon biodiesel.