Advanced biofuels, petro groups oppose Grassley provision

Source: Amanda Reilly, E&E reporter • Posted: Friday, October 23, 2015

An advanced biofuels trade group joined with gasoline station owners to protest a provision in the Senate tax extenders package that would change the form of a key biofuels tax credit.

The provision would convert the $1-a-gallon tax credit available to entities that blend biodiesel and renewable diesel into a producer tax credit, as well as make imported biofuels ineligible for the credit.

According to the Advanced Biofuels Association (ABFA) and four groups representing petroleum marketers, changing the form of the credit would cost fuel retailers and limit the supply of heating oil available in the Northeast.

“Converting the tax credit to a producer’s tax credit and denying its availability to imported fuels will benefit a small group of biodiesel producers,” the groups wrote in a letter yesterday to House Ways and Means Chairman Paul Ryan (R-Wis.) and ranking member Sander Levin (D-Mich.).

Sen. Chuck Grassley (R-Iowa) offered the language as an amendment; by voice vote, the Senate Finance Committee adopted the provision in its tax extenders package approved in July (E&ENews PM, July 21). Sen. Maria Cantwell (D-Wash.) co-sponsored the amendment.

Congress established the biodiesel tax credit in 2005 but has allowed it to expire multiple times. Lawmakers retroactively extended the credit last December, but it expired again at the beginning of the year.

The Grassley-Cantwell amendment would extent the tax credit for two years. Starting in 2016, the incentive would become a producer tax credit.

The National Biodiesel Board supports the change. In a statement provided to E&ENews PM, Vice President of Federal Affairs Anne Steckel called it a “common-sense reform.”

The provision would “not only simplify the tax code for biodiesel but will also save taxpayer dollars by ensuring that the tax credit supports only domestic production,” Steckel said. “We think most members of Congress would agree that American tax dollars should be used to stimulate U.S. manufacturing and should not be going to support foreign production that is simply blended in the U.S.”

But in their letter, the ABFA and petroleum groups warned that the change, by denying access to the credit to foreign producers, would likely result in a trade violation. They also said that the credit would come at the expense of gas station owners that have purchased expensive equipment to dispense blended fuels.

Along with ABFA, the letter was signed by the National Association of Truck Stop Operators, the Petroleum Marketers Association of America, SIGMA and the National Association of Convenience Stores.

In a statement, ABFA President Michael McAdams said that the credit has worked well up to now for both consumers and biodiesel blenders.

“This amendment destroys these positives,” he said, “by syphoning the benefits to a small group of producers and punishing everyone else along the supply chain, including consumers.”