Congress has allowed a biodiesel tax incentive to lapse at year’s end. The $1-per-gallon biodiesel tax incentive expired on Dec. 31. The biodiesel incentive also expired in 2010 and 2012.
“This marks the third time in five years that this incentive will have expired,” Anne Steckel, vice president of federal affairs at the National Biodiesel Board, wrote in a letter to Congressional leaders. “The uncertainty this creates is a major reason why we are still so dependent on petroleum. It is incredibly disruptive, not just to biodiesel plants across the country but also to our bipartisan goals of creating jobs in new domestic energy industries and boosting our energy security by diversifying our fuel supplies.”
“Biodiesel producers, many of them small companies, are reluctant to add new jobs when there is a strong likelihood that the incentive will disappear,” the letter continues. “Many are forced to cut back production when the incentive expires, causing job losses and even plant closures.”
Steckel added that NBB is pleased to see the ongoing discussion around tax reform but urged the lawmakers to not hold up tax extenders while those long-term negotiations continue.
Biodiesel – made from a diverse mix of resources such as recycled cooking oil, soybean oil and animal fats – is the first EPA-designated Advanced Biofuel to reach commercial-scale production nationwide. It has exceeded 1 billion gallons of annual production in each of the past three years, and this year is on track to reach a record of 1.7 billion gallons.
In addition to the pending expiration of the tax incentive, the Renewable Fuel Standard proposal from the EPA, which was recently proposed will limit biodiesel volumes under the RFS to 1.28 billion gallons for the next two years.
Under the RFS, biodiesel and other renewable diesel fuels combine to fill the Biomass-Based Diesel category, which EPA data shows a total of more than 1.56 billion gallons produced. The U.S. biodiesel industry is the largest producer of EPA-designated Advanced Biofuel in the nation and in producing record volumes supported more than 62,000 jobs and $2.6 billion in wages, according to NBB.