The battered biodiesel industry is holding its breath as the long awaited renewal of the tax incentive for the biofuel inches closer to becoming law.
The U.S. House of Representatives voted by a 277 to 148 margin to approve H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The legislation, which reflects the framework of the tax agreement reached by President Obama and Congress, retroactively extends the biodiesel tax incentive through 2011. The bill will now be sent to the President for signature.
“Reinstatement of the biodiesel tax credit is welcome news for the U.S. biodiesel industry and good news for the nation as a whole,” said Manning Feraci, NBB Vice President of Federal Affairs. “This will undoubtedly help kick-start the domestic biodiesel industry, lessen our dependence on foreign oil, and create thousands of new jobs across the country.”
Biodiesel is a commercially viable, renewable, low carbon diesel replacement fuel that is widely accepted in the marketplace. The fuel meets an exact commercial fuel specification (ASTM D6751) and is the only domestically produced, commercial scale fuel that qualifies as an Advanced Biofuel under the Renewable Fuels Standard.
The biodiesel tax incentive is structured in a manner that makes the fuel price competitive with conventional diesel fuel in the marketplace. The lapse of the tax incentive on December 31, 2009 has had a detrimental impact on the domestic biodiesel industry. Conversely, retroactive reinstatement and extension of the tax incentive through 2011, as provided for in the tax bill approved by the U.S. Senate, is widely expected to increase U.S. biodiesel production and in the process, displace foreign petroleum with a domestic Advanced Biofuel.
“The U.S. biodiesel industry is poised for a strong 2011, and stands ready to meet the nation’s Advanced Biofuel goals,” Feraci said.
Also in the bill are provisions for a reduction in the estate tax and incentives for ethanol. All in all, it is a very good bill for agriculture, said Joe Shultz, who works on agricultural issues with Senator Sherrod Brown.
The Ohio Corn Growers Association (OCGA) applauds the one-year extension of a 45 cents-per-gallon tax credit to gasoline refiners for blending ethanol into the gasoline supply. Originally enacted in 2004 as part of the JOBS Creation Act, the U.S. Congress approved this credit, known as the Volumetric Ethanol Excise Tax Credit (VEETC).
“Corn ethanol production stimulates rural Ohio communities by creating high-paying jobs, boosting local tax revenues and creating partnership opportunities for local businesses,” said OCGA President John Davis. “It also decreases our dependency on foreign oil, which is vital to our nation’s security and economy.”