The Senate has decided to table the consideration of an extension to the biodiesel tax credit until early next year, a move that has biodiesel producers up in arms, as the current tax credit expires Dec. 31.
Some say the delay would force biodiesel producers to cease operations and lay off their workers because consumer demand for the fuel would plunge without the credit.
"Our members want to support green initiatives," said Lisa Mullings, president and CEO of NATSO, a national trade association representing travel plaza and truckstop owners and operators. "But they are concerned that if they make the investment in biodiesel fueling infrastructure and the tax credit isn't renewed they won't be able to sell the biodiesel because of the price disparity between biodiesel and other fuels."
Earlier this month, the House of Representatives passed a one-year extension of the current $1 per gallon tax blender credit for biodiesel. The biodiesel tax credit, which is part of the "extenders" package known as H.R. 4213, includes $5 billion in individual tax relief, $17 billion in business tax relief, $1.2 billion to encourage charitable giving, $2.6 billion for disaster tax relief provisions and more than $1 billion to extend expiring energy tax provisions.
But the Senate is tied up with other priorities, especially the health care debate. Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa, say they will take up the legislation when Congress reconvenes at the first of the year.
"The tax credit is essential in maintaining the competiveness of this clean-burning, domestically produced green fuel," said Grassley, in a floor statement. "The tax credit exists to offset the higher cost of producing biodiesel compared to petroleum diesel.
"Without an extension of the tax credit, all U.S. biodiesel production will grind to a halt. Plants will be shuddered, and workers will be let go. No one should be surprised by the upcoming expiration of this tax credit."
In a recent National Biodiesel Board study examining the economic impact of the biodiesel industry and the consequences of allowing the tax credit to lapse, the NBB concluded that the delay would have negative impacts on the biodiesel industry. The NBB says that without the incentive, the industry would experience a major loss of jobs and income; increased demand for petroleum diesel; a degradation of energy security; decreased demand for soybean oil and lower soybean prices leading to a negative impact on farm income; stranded investment as biodiesel capacity is idled; and lost tax revenue for states and local governments.
"Since it was enacted in 2004, the biodiesel tax incentive has allowed the nation to reap the economic, energy security and environmental benefits associated with commercial scale production and use of biodiesel," said Manning Feraci, vice president of federal affairs for the NBB. "Allowing the credit to lapse will compound the already daunting challenges facing the industry and will cost the nation another 23,000 jobs in addition to the 29,000 jobs that were shed in 2009."
To read Sen. Grassley's floor speech, click here.