NBB urges Congress to take action on Biodiesel Tax Incentive
The National Biodiesel Board (NBB) has sent a letter on behalf of US biodiesel producers to the US House and Senate tax committee leaders urging for an extension and reform of the biodiesel tax incentive before it expires on 31st December.
The National Biodiesel Board (NBB), a US trade association representing the biodiesel and renewable diesel industries, including producers, feedstock suppliers, and fuel distributors, has sent a letter on behalf of US biodiesel producers to the US House and Senate tax committee leaders urging for an extension and reform of the biodiesel tax incentive before it expires on 31st December.
Call for simple reform
– We strongly urge you to extend the biodiesel tax credit and take this opportunity to make a simple, common-sense reform by focusing the credit on US production, said Donnell Rehagen, Interim NBB CEO in the letter.
Under the current “blender’s” structure of the incentive, foreign biodiesel imported to the US and blended with petroleum diesel in the US is eligible for the tax incentive. Increasingly, overseas producers are taking advantage of this by exporting biodiesel to the US for blending. According to NBB, some 670 million US gallons (≈ 2.53 billion litres) of biodiesel and renewable diesel was imported to the US in 2015, making up nearly a third of the approximately 2.1 billion US gallons (≈ 7.9 billion litres) consumed 2015.
– Legislation pending before Congress – S. 3188 and H.R. 5240 – would accomplish these objectives by extending the incentive through 2019 and changing it from a blender’s credit to a domestic producer’s credit. The legislation has strong support from American biodiesel producers and strong bipartisan support in both the House and Senate – reflected last year when a similar proposal passed the Senate Finance Committee, Rehagen pointed out in the letter.
Mobilising untapped capacity
According to NBB, the growth of the US biodiesel industry in recent years is paying “tremendous dividends” in reducing emissions, strengthening energy security, generating competition in the diesel sector and creating jobs and economic activity in every state in the nation. The biodiesel industry supports nearly 48 000 jobs and US$1.9 billion in wages across the US.
Furthermore Rehagen highlights that US biodiesel producers have over 1.5 billion gallons (≈ 5.6 billion litres) of unused production capacity that stands ready to be utilised under the right policy framework. Mobilising that capacity would create thousands of jobs and billions of dollars in economic activity. Reforming the blender’s incentive would also save the Treasury some US$90 million as imports are reduced and domestic production rises, according to the Joint Committee on Taxation.
– Many biodiesel producers who are now poised to expand and hire would likely cut jobs and production. Congress can avoid this with a long-term extension giving producers the policy stability they need to plan for the future, ended Rehagen.