The U.S. House Tuesday reinstated the biodiesel tax incentive for 2012 and 2013 as part of a year-end fiscal package that avoided the so-called "fiscal cliff." President Obama is expected to quickly sign the bill into law.


The $1 a gallon biodiesel tax credit expired on Dec. 31, 2011. The two-year extension was made retroactive, so it will run through the end of 2013.

"It's been a long year with a lot of missed opportunity and lost jobs in the biodiesel industry. But we're pleased that Congress has finally approved an extension so that we can get production back on track," said Anne Steckel, vice president of federal affairs at the National Biodiesel Board.

A recent study found that the industry would have produced an additional 300 million gallons this year with the tax incentive in place. That would have supported some 19,213 additional jobs, for a total of 83,258 jobs supported by the industry nationwide, according to the study, conducted by Cardno Entrix, an international economics consulting firm.

Looking to next year, the study found that the industry would support some 112,078 jobs nationally with the tax credit in place versus 81,977 without it. Additionally, the return of the incentive is projected to increase household income by some $1.6 billion next year while supporting an additional $3.1 billion in GDP.

Along with these economic benefits, Steckel emphasized that biodiesel is helping reduce America's dependence on imported petroleum and making us less vulnerable to global petroleum markets that continue to disrupt the economy and threaten our national security, while significantly reducing tailpipe pollution and greenhouse gas emissions.

"This is important not just for jobs but for diversifying our energy supplies, improving our energy security and reducing costly emissions," Steckel said.

The $1-per-gallon biodiesel tax incentive was first implemented in 2005. Congress has allowed it to lapse twice, in 2010 and again in 2012. Under the legislation approved by the House on Tuesday and first passed by the Senate on Monday, the incentive will be reinstated retroactively to Jan. 1, 2012 and through the end of 2013.

Steckel thanked the industry's supporters on Capitol Hill for pressing for the incentive, particularly Sens. Maria Cantwell, D-Wash., and Charles Grassley, R-Iowa, and Reps. Aaron Schock, R-Ill.; and Collin Peterson, D-Minn.

According to Reuters, Sen. Grassley told reporters he expects the credit will be phased out at some point but that there is little sentiment to do so at the moment.

Roughly one-quarter of U.S. soybean oil is used in making biodiesel, although it is being made from an increasingly diverse mix of resources such as recycled cooking oil, soybean oil and animal fats.

Also in the bill was an extension of a $1.01 a gallon credit for making biofuels from cellulose, found in woody plants, trees and grasses, Reuters reports, as well as that made from algae.

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