Politics Could Be Downfall of Biodiesel Amendments

This week's vote on highway bill may be last chance for biodiesel tax credit extension until after election.

Published on: Mar 13, 2012

Votes on separate amendments to extend the biodiesel tax credit for one year, going back to Jan. 1 when it expired, are expected in the U.S. Senate this week as part of a pending highway bill. But the industry concedes that competitions could complicate things.

Senate Agriculture Chair Debbie Stabenow, D-Mich., and Ranking Committee Member Pat Roberts, R-Kan., both want to extend the biodiesel blender's credit, which is a key to sustaining the industry. The credit lapsed in 2010, resulting in plant closures and many job losses before it was restored last year and expired again in December. But National Biodiesel Board Spokesman Ben Evans says the Stabenow and Roberts amendments have political elements.

"The Democratic amendment from Senator Stabenow has more of a renewable focus, includes some solar incentives and things like that could run into trouble," Evans said. "The Republican amendment from Senator Roberts includes more conventional drilling and pipeline stuff such as the Keystone pipeline."

An earlier amendment to fast track that pipeline from Canada to the Gulf Coast, over the President's objections, failed. The new amendment has the biodiesel credit, but Evans says their concern is that they are going to be split and both amendments will be voted down along party lines. Although they hope that doesn't happen it is a possibility, especially when it takes 60 votes to amend bills.

Evans says his group is urging Senators to pluck out and pass those measures they can agree on including extending the biodiesel tax credit. He argues this could be one of the last chances the biodiesel industry has until after the November elections to restore the blender's credit. But there's also the politics of rising gas and diesel prices, which Evans hopes factors into the biodiesel debate.

"It's these kinds of price spikes that really make a case for increasing production of domestic fuels, fuels like biodiesel," Evans said. "I think that is the only way we are ever going to really escape this cycle of oil price spikes is we need to diversify our fuel supplies so we're not held hostage to the fluctuations in oil prices."

Evans says even without the tax credit, there are areas and business models where biodiesel is competitive with conventional biodiesel, simply due to the run-up in oil prices.