BIOMASS HUB

Sen. Chuck Grassley (R-IA) introduced a bill (S.3440) yesterday to renew tax credit incentives for biodiesel and renewable diesel.  No information on the text of the bill has yet been released.

The extension of biodiesel tax credits has remained an elusive prize for industry proponents.  The large legislative package that includes the original biodiesel tax credit extension (see Biodiesel Back in the Game) has met complications as House and Senate leaders wrangle over revenue offsets and the overall size and scope of the bill.

Since the expiration of the biodiesel tax credit in December 2009, the industry has struggled with plant closings and many others standing idle.  On January 1st of this year, about 23,000 people were employed in the biodiesel industry, according to Grassley. Because of the lapse in the credit, nearly every biodiesel facility in the country is idled or operating at a fraction of its capacity.  About 2,000 jobs have been lost at Iowa’s 15 biodiesel refineries.

Grassley called it ironic May 5 that the president didn’t call for extension of the tax credit, which expired Dec. 31, while he was promoting renewable fuels in Iowa last week.  Obama’s trip touring manufacturers of wind energy components  took him within a few miles of biodiesel facilities one in Keokuk, Washington and Crawfordsville that are idled because of the expiration of the biodiesel fuel tax credit.

Grassley notes:

So the thousands of jobs created by the wind industry in Iowa have essentially been offset by the thousands of jobs lost in the biodiesel industry.

Although Obama didn’t publicly address the issue during his visit, Brad Albin of Renewable Energy Group and secretary of the Iowa Renewable Fuels Association told the president that plants are idled and 90 percent of the biodiesel employees have been laid off as a result of the tax credit lapse:

We’re going to die without this tax credit.

The Senate has voted to extend the credit, but the House has not taken up the extension.  Grassley, who knows Obama’s commitment to renewable energy from working with him when the president was a senator, would like to see more active support now:

He ought to be giving some push to this, particularly when traveling southeast Iowa to say that you want a jobs bill, you want to promote green jobs, you want to promote more jobs.  One little simple bill, not controversial, and you could put 23,000 people back to work right away.

As Grassley has advocated federal support of the biodiesel industry and has pushed for extension of the incentive, others in Washington, including U.S. Congressman Jeff Flake (R-AZ) have voiced opposition:

I don’t think Congress should attempt to pick winners and losers by allowing tax incentives for one form of energy over another.  The role of Congress should not be to play favorites, and extending tax incentives to biodiesel producers over those who produce alternative forms of energy does just that.  [I am] wary of creating narrow tax provisions that further complicate the cumbersome tax code.

Sections 40A, 6426, and 6427(e) of the Internal Revenue Code (Code) provide tax incentives for the production, sale, and use of biodiesel and biodiesel mixtures.  Under the Code, the production tax credit applies to qualified blenders of biodiesel and agri-biodiesel fuels and allows them to receive an income and excise tax credit if certain conditions are met.

The most recent tax extension bill has been introduced to the Senate and referred to the Committee on Finance.