Editor: As the headline states, NBB is pushing for a “reformed” biodiesel tax credit that cuts out foreign competition and domestic blenders below the producer level. That sentiment is not surprising given the general demographics of the organization, but it is obviously not universal further downstream in the wholesale and distributor community. Here’s the NBB release with the stated rationale.
The National Biodiesel Board called on Congress to quickly pass a reformed biodiesel producer’s tax incentive Thursday as tax negotiations heated up on Capitol Hill and lawmakers introduced updated biodiesel tax legislation in the House and Senate.
“The biodiesel industry cannot grow and support good-paying jobs without some level of predictability on tax policy, and the legislative clock is winding down,” said Anne Steckel, NBB’s vice president of federal affairs. “This tax incentive has strong bipartisan support, as demonstrated by the bills introduced today. It’s good for the economy, it’s good for the environment and it’s good for consumers. And importantly the reforms included in today’s bills will appropriately focus the incentive on U.S. production”
The new legislation, sponsored by Sens. Charles Grassley (R-Iowa) and Maria Cantwell (D-Wash.), and Reps. Kristi Noem (R-S.D.) and Bill Pascrell (D-N.J), builds on legislation (S. 1946) that won unanimous support from the Senate Finance Committee in July.
“We want to thank Reps. Noem and Pascrell and Sens. Grassley and Cantwell again for their leadership on this issue,” she added. “This bill, when passed into law, will go a long way toward creating biodiesel jobs across the country and reducing our dependence on foreign oil.”
The bills include a key reform restructuring the incentive from a blender’s credit to a producer’s credit focused on domestic production. Under the existing blender’s structure, biodiesel that is produced overseas and blended in the U.S. is increasingly taking advantage of the incentive, undermining U.S. production and directing U.S. tax benefits to foreign producers. Already this year we have seen more than 500 million gallons of foreign fuel blended in the U.S. to take advantage of the incentive. By limiting the incentive to apply only to domestic production, the reform would save about $90 million, according to the Joint Committee on Taxation.
“I think lawmakers would universally agree we shouldn’t be using U.S. tax dollars to support the production of foreign fuel,” Steckel said. “The whole point of this policy is to create American jobs and industry while strengthening our energy security and encouraging innovation in the fuels market.”
Additionally, under the blender’s structure, thousands of companies are eligible to apply for the credit at a variety of points along the distribution chain – making it difficult for the RFS to monitor compliance and fraud. By narrowing the eligibility for the credit to domestic biodiesel producers, the reform would streamline the process for taking the credit. The incentive will continue benefiting consumers by lowering the cost of biodiesel blended into diesel fuel.