By Keith Reid
The long overdue biodiesel tax credit extension appears to be finally happening. Given how frequently this scenario seems to play out, it’s almost as if letting the credit lapse, waiting a couple of years then retroactively renewing and extending it was written into the legislation itself.
On hold since 2017, the Restoring Tax Fairness for States and Localities Act was tacked on to the latest $1.4 trillion appropriations bill. It restores the $1 per gallon biodiesel blending credit and the $1.01 credit for advanced biofuels that can be produced from non-food biomass. This is applied retroactively for 2018 and 2019 and extends forward to 2022 for biodiesel and 2021 for advanced biofuels.
The act contained two amendments submitted by Reps. Abby Finkenauer (D-IA) and Cindy Axne (D-IA) that effectively restored the extension. “We thank Representatives Dave Loebsack, Abby Finkenauer, and Cindy Axne for working diligently among their colleagues in the House to build support for the credit and impressing upon their leadership just how important the biodiesel credit is to rural America,” said Iowa Renewable Fuels Association Executive Director Monte Shaw in a release. “Iowans remain united behind a growing role for biofuels and today’s news provides a boost for Iowa’s economy heading into a new year.”
While not yet signed into law, no objections are expected in the Senate or from the White House, and the appropriations bill itself must be passed by the end of this week (12/20/2019). Senator Chuck Grassley (R-IA) worked the deal through the Senate and the Trump administration is said to be on board with the credit’s renewal and plans on signing the appropriations bill. Neither are surprising given that it’s campaign season, and, where the biodiesel credit is concerned, it services the farm vote which has been strained by the impact of Trump’s China tariffs.
As might be expected, the news was met with approval in renewable energy circles as well organizations focused on trucking, diesel retailing and distribution. Here are some of the highlights:
Renewable Fuels Association President and CEO Geoff Cooper: “This is welcome news for the entire renewable fuels industry, and we thank Senator Grassley, Speaker Pelosi and other congressional leadership who made this important compromise possible. While we continue to advocate for prospective, longer-term certainty for the second-generation biofuel producer credit and other relevant tax provisions, we are grateful this deal was reached to retroactively reinstate the lapsed second-generation biofuel provisions and extend them through 2020. We also appreciate the renewal and extension of the biodiesel and renewable diesel credit, as more than two billion pounds of corn distillers oil from ethanol plants are converted annually into the lowest-carbon source of biodiesel and renewable diesel available on the market today.”
Kurt Kovarik, National Biodiesel Board’s Vice President of Federal Affairs: “Today’s announced deal provides the policy certainty that the biodiesel industry has been seeking to support investments and continued growth of production. NBB and its members are grateful that Congressional leaders are providing a positive signal before the year’s end. On behalf of NBB members, I’d like to thank Senator Chuck Grassley and Representative Abby Finkenauer as well as many other senators and representatives from both sides of the aisle for their strong and consistent championship of our industry. I’d also like to thank the producers, soybean farmers, heating oil distributors, blenders, and others who have worked tirelessly to advocate for extension of the biodiesel tax credit. We will continue to work with our champions to get this legislation across the finish line before the end of the year.”
NATSO, the national association representing truckstops and travel plazas, American Trucking Associations (ATA), National Association of Convenience Stores (NACS), and Society of Independent Gasoline Marketers of America (SIGMA) all recently stated support for legislation to extend the credit in an April 4, 2019, joint release:
Paige Anderson, Director, Government Relations, National Association of Convenience Stores: “NACS members around the country have used the tax credit to offer biodiesel as an affordable option for consumers. We applaud the bipartisan group of Members of Congress for introducing a two-year extension of the credit so fuel retailers and marketers can include biodiesel in their fuel portfolio in the near future.”
David Fialkov, Vice President of Government Affairs for NATSO: “This legislation underscores the fact that the biodiesel tax credit has strong Democratic support in the House of Representatives. The authors of this legislation understand that the biodiesel tax credit helps create jobs, reduce the transportation sector’s greenhouse gas emissions, and enables fuel retailers to offer more competitively priced diesel fuel, which in turn lowers the price of all consumer goods that are moved by truck. The biodiesel tax credit has bipartisan support in both chambers of Congress. It’s time to get this done.”
Brad Puryear, President of SIGMA: “SIGMA strongly supports this legislation, which would immediately incentivize fuel marketers to buy and blend additional gallons of biofuels. This legislation promotes American energy independence and cleaner energy. The biodiesel tax credit also leads to more competitive pricing of diesel fuel at the pump, which benefits American consumers.”
ATA Vice President Glen Kedzie: “ATA applauds the bipartisan group of House lawmakers for introducing this legislation. The biodiesel blender tax credit results in lower fuel costs for truckers throughout the country.”
Petroleum Marketers Association of America (PMAA) is also on board with extending the credit.
So far, the American Petroleum Institute has not commented on the news. With such developments API typically calls for an end to the Renewable Fuels Standard.
Electric vehicles came up short in the appropriations bill. A current tax credit offers $7,500 for each EV sold up to total 200,000 total units per manufacturer. As Greg Gardner recently reported in Forbes, many automakers are nearing the 200,000 limit and there is a strong lobbying push to raise that significantly. He cited the failure was due to pushback from the Trump administration, which essentially sees the EV credit as primarily benefiting wealthy West Coast elites. For obvious reasons, Trump is less concerned about the Los Angeles and San Francisco voting blocks than he is agricultural communities, many of which fall in red or swing states.
Despite the good news for their industry on the tax credit front, biofuel producers and agribusiness still offer some significant pushback relative to other RFS issues.
As previously covered HERE, the small refinery exemptions under the RFS and how they have been applied in recent years remain a bone of contention despite some efforts by EPA to address the concerns.
“President Trump pledged to deliver certainty and stability for America’s farmers and biofuel producers by restoring integrity to the RFS,” said Growth Energy CEO Emily Skor in a release. “While we’re encouraged that EPA is finally taking steps to follow the law and account for biofuel demand lost to secretive oil refinery exemptions, this rule leaves important work unfinished.
“Integrity is restored to the RFS only if the agency accurately accounts for exemptions it will grant. The rule uses an accounting formula based on Department of Energy recommendations, which EPA has a poor track record of following. All eyes will now be on EPA’s next round of refinery exemptions and future targets, which will signal whether Administrator Wheeler is truly committed to ending demand destruction.”
American Coalition for Ethanol (ACE) CEO Brian Jennings was even more aggressive in his assessment. “Over the course of the past few months, we’ve gone from promises of a ‘giant package’ to the reality of a lump of coal,” he said. “To say we are disappointed is an understatement. While it was well understood this rulemaking would not make farmers and the ethanol industry ‘whole’ for the damage EPA has done by abusing the small refinery exemption provision of the RFS, we were led to believe the rule would represent a step in the right direction, an opportunity to account in a meaningful way for refinery waivers.
“We are forced yet again to continue defending the RFS and fighting EPA’s mismanagement of the program in the third branch of government, but this is another painful reminder our industry needs to go on offense with a new plan to increase demand on ethanol’s low carbon and high octane advantages.”
The same goes with the Trump administration’s and EPA’s stated support to ease the expansion of E15 (gasoline with 15 percent ethanol content) beyond the currently common E10. “Additionally, Administrator Wheeler must act swiftly to break down remaining market barriers to E15 as promised in the October 4th EPA announcement,” said Skor. “When the RFS is working as intended and government has eliminated market access barriers, drivers across the nation will able to take full advantage of the administration’s move to unleash sales of E15 year-round.”