Biodiesel lobby begs lawmakers to reinstate lapsed credit

Source: By Marc Heller, E&E News reporter • Posted: Wednesday, November 13, 2019

A nearly two-year lapse in a federal tax credit for biodiesel producers is hurting an industry already suffering from the Trump administration’s renewable fuel policies.

That’s the assessment of the National Biodiesel Board, a group pushing for a retroactive extension of the $1-per-gallon tax credit that expired at the end of 2017.

Lawmakers are considering reviving the credit as part of a package of other tax benefits that Congress has a habit of allowing to expire, then extending retroactively, before the end of this year.

Senate Finance Chairman Chuck Grassley (R-Iowa), a proponent of the biodiesel credit, told reporters yesterday that he doesn’t see imminent action on the so-called tax extenders.

In pressing for the credit, the NBB released a report yesterday suggesting biodiesel producers are struggling more than usual because the lapse is the longest Congress has allowed since the tax credit was enacted in 2005.

“With the tax credit lapsed, producers are currently operating at a loss,” said the report, prepared by consultant ABF Economics of Doylestown, Pa.

Biodiesel plants overall are running at just 70% of capacity, and nine facilities have closed or cut production recently in Iowa and other states, NBB representatives said.

Without an extension of the tax credit, a dozen more could be idled in the weeks and months ahead, said Kurt Kovarik, vice president of federal affairs at the NBB.

The absence of the credit affects producers’ short-term business decisions, while federal biofuel blending mandates raise long-term questions for biodiesel companies, said NBB CEO Donnell Rehagen in a conference call with reporters.

The NBB was one of 66 national trade groups writing to congressional leaders yesterday, urging an extension of the tax provisions through at least 2020.

Grassley told reporters on a conference call yesterday that it’s possible the tax measure won’t come up until next year, depending how much progress Congress makes on the annual appropriations bill upon which it’s likely to ride.

“Those discussions are going on, but no agreement,” Grassley said.

Republicans have complained that Democrats are being too ambitious in their calls for the extension and expansion of clean energy incentives (E&E Daily, Nov. 6).

The biofuel mandates, part of the renewable fuel standard, are also affected by EPA’s granting of exemptions to some small refineries. Those exemptions, which have increased sharply during the Trump administration, undercut demand for biofuels, Kovarik said.

“It’s hard to say which is more important,” Kovarik said. “They both provide different types of certainty.”

The exemptions issue continues to play out at EPA, where officials have proposed administrative tweaks to the RFS. The NBB and other groups have called on EPA to ensure that overall biofuel volumes aren’t affected by waivers, such as by reallocating the affected volumes to other refiners.