The National Biodiesel Board (NBB) applauded the introduction in the U.S. House of Representatives of a bipartisan biodiesel tax credit bill that would convert the blender’s credit for biodiesel to a $1-per-gallon production credit for fuels produced in the United States for 2017, 2018, 2019 and 2020.
The bill, H.R. 2383, led by U.S. Representatives Kristi Noem (R-South Dakota) and Bill Pascrell (D-New Jersey), provides an additional 10-cent-per-gallon credit for small U.S. biodiesel producers. Companion legislation was recently introduced in the U.S. Senate by Senators Chuck Grassley (R-Iowa) and Maria Cantwell (D-Washington).
“We are thrilled to see momentum building in both chambers of Congress for this important tax reform. It is long overdue to close this loophole and better align the incentive with Congress’ intent—to invest American taxpayer dollars to spur job creation here at home. We look forward to working with Congress to move this proposal forward,” said Anne Steckel, Vice President of Federal Affairs at NBB. After all, the U.S. biodiesel industry supports more than 50,000 jobs.
This bipartisan bill seeks to reinstate the biodiesel and small producers tax credits that expired at the end of 2016, but with a change to who is eligible for the credit. Previously, the tax credit was open to blenders of biodiesel, but this legislation would provide tax credits to U.S. producers instead of blenders. Doing so prevents subsidization of foreign manufacturers.
Taxpayer dollars and U.S. energy policy should be—and typically are—aimed at incentivizing domestic production, not foreign production. The current structure of the biodiesel tax incentive as a blender’s credit increasingly allows foreign producers to access the credit if their fuel is blended in the United States. Importantly, this reform would not block imported biodiesel from entering the U.S. market; in fact, significant imports would likely continue coming to the U.S. and receiving incentives under the Renewable Fuel Standard (RFS) and California’s Low Carbon Fuel Standard (LCFS).
U.S. biodiesel producers just need a level playing field to compete with foreign production. For example, since 2009, the European Union has levied duties on U.S. biodiesel that effectively block U.S. biodiesel from entering the European market. At the same time, U.S. policy is incentivizing European biodiesel shipments to the U.S. by rewarding it with the $1-per-gallon credit.
Additionally, Argentinian biodiesel that receives significant incentives under that country’s Differential Export Tax regime is increasingly being shipped to the U.S. market where it also can qualify for the U.S. tax incentive. Without this reform, U.S. tax policy is increasingly creating competitive disparities in which U.S. companies are losing U.S. market share to subsidized foreign production in Europe, Argentina and other nations.
Changing the structure of the tax credit also would save taxpayers millions of dollars. Biodiesel imports to the U.S. have grown sharply in recent years, largely as a result of the tax credit. In 2015 alone, the U.S. Treasury spent more than $600 million on tax credits for imported biodiesel and renewable diesel. Importantly, this fuel often had already received subsidies in its country of origin (Argentina, Indonesia and the European Union, for example).
The Senate version was introduced by U.S. Senators Chuck Grassley (R-Iowa) and Maria Cantwell (D-Washington), with 14 other original cosponsors, including Pat Roberts (R-Kansas), Heidi Heitkamp (D-North Dakota), John Thune (R-South Dakota), Sheldon Whitehouse (D-Rhode Island), Martin Heinrich (D-New Mexico), Joni Ernst (R-Iowa), Joe Donnelly (D-Indiana), Roy Blunt (R-Mossouri), Mazie Hirono (D-Hawaii), Al Franken (D-Minnesota), Patty Murray (D-Washington), Amy Klobuchar (D-Minnesota), Tom Udall (D-New Mexico) and Jeanne Shaheen (D-New Hampshire). The House version was also cosponsored by Representative Dave Loebsack (D-Iowa).
In the industry, this effort is opposed by the National Association of Truck Stop Operators (NATSO), the Advanced Biofuels Association, the American Trucking Associations (ATA), National Association of Convenience Stores (NACS), Petroleum Marketers Association of America (PMAA) and the Society of Independent Gasoline Marketers of America (SIGMA). See the rebuttal HERE.
