WASHINGTON - Sen. Chuck Grassley of Iowa and Sen. Maria Cantwell of Washington today introduced legislation to reform and extend the biodiesel tax credit. The legislation is similar to the provision that passed out of the Finance Committee in July.
"This provision should be included in the tax extenders package under discussion," Grassley said. "Converting to a production credit would improve the biodiesel incentive in many ways. It would make the biodiesel incentive easier to administer. Also, a credit for domestic production would ensure that we're incentivizing a domestic industry rather than subsidizing imported biofuels. The goal is to meet the country's biodiesel needs and support domestic producers at the same time. And it would save money over the current biodiesel tax incentive."
"Investing in America's clean energy economy is the smart thing to do for our environment and America's energy security," Cantwell said. "The biodiesel tax credit has been an extremely successful energy tax policy, allowing biodiesel to become America's first advanced biofuel. Since the credit was created in 2005, 8.2 billion gallons of biodiesel have replaced traditional diesel, the equivalent of removing nearly 16 million vehicles from our roadways. This bill gives businesses the certainty they need to invest in biodiesel, create jobs here in America, and continue the development of affordable, domestic alternatives to fossil fuels."
The senators' Biodiesel Tax Incentive Reform and Extension Act of 2015 would modify the biodiesel fuel blenders credit to a domestic production credit and extend the credit through 2018.
The change would offer numerous benefits, Grassley and Cantwell said. The blenders credit can be difficult to administer, because the blending of the fuel can occur at many different stages of the fuel distribution. This can make it difficult to ensure that only fuel that qualifies for the credit claims the incentive. It has been susceptible to abuse because of this.
A credit for domestic production would ensure that the United States is incentivizing the domestic industry rather than subsidizing imported biofuels. It's projected that imports from Argentina, Singapore, the European Union, South Korea and others could exceed 1.5 billion gallons over this year and next. In many cases, foreign biodiesel is already heavily subsidized, so U.S. taxpayers should not be providing a subsidy to such imports.
Grassley and Cantwell said modifying the credit would have little to no impact on the consumer. Much of the credit would continue to be passed on to the blender and ultimately, the consumer. Additionally, the U.S. biodiesel industry is currently operating at only 60 percent of capacity. The domestic biodiesel industry has the capacity and access to affordable feedstocks to meet the demand of U.S. consumers, the senators said.
The Biodiesel Tax Incentive Reform and Extension Act of 2015 would allow the nation to continue enjoying the significant benefits of biodiesel since Congress created the biodiesel tax incentive in 2005. As a result of this incentive, the Renewable Fuel Standard, and consumer interest, biodiesel is providing significant benefits to the nation. Domestic biodiesel production supports tens of thousands of jobs. Replacing traditional diesel with biodiesel reduces emissions and creates cleaner air. Homegrown biodiesel improves U.S. energy security by diversifying transportation fuels and reducing dependence on foreign oil. Biodiesel itself is a diverse fuel that can be produced from a wide array of resources such as recycled cooking oil, soybean and other plant oils, and animal fats.
The text of the Biodiesel Tax Incentive Reform and Extension Act of 2015 is available here.
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