Permanent biodiesel tax incentive introduced
The National Biodiesel Board applauded Representatives Earl Pomeroy, D-ND, and Kenny Hulshof, R-MO, for introducing the Renewable Fuels and Energy Independence Promotion Act. It was their first legislation in the 110th Congress, which convened at noon Jan. 4. The legislation would make the federal excise tax credit for biodiesel permanent. If adopted, the move would likely lead to dramatic and sustained growth of biodiesel use.
The tax credit took effect in 2005 and is currently set to expire in 2008. The NBB, which played a key role in getting the original incentive passed and extended, praised the Representatives.
"Introducing this legislation is a positive message to policymakers, the biodiesel industry and all Americans that biodiesel has an important role to play in U.S. energy policy," said NBB Chief Executive Officer Joe Jobe. "A permanent tax incentive gives confidence for continued biodiesel industry growth. Biodiesel allows Americans to use less petroleum, boost the U.S. economy and improve air quality."
"We must do everything we can to encourage the production of renewable fuels as our nation strives for energy independence," Pomeroy said. "Making this tax credit for ethanol and biodiesel permanent is a critical component of that effort. These renewable fuel tax credits are of vital importance to North Dakota's economy, which is why I've made it one of my top priorities in this Congress. North Dakota has seen first-hand the positive impact these tax credits can have in growing the ethanol and biodiesel industries, and this bill ensures those same benefits will continue to be available."
"We must reduce our dependence on foreign oil," Hulshof said. "Domestically-produced renewable fuels play an integral role in promoting energy independence. If renewable fuels are to displace significant amounts of petroleum as fuel, we must take bold, aggressive steps to achieve this end. History has shown us that the tax incentive works and a long-term commitment to federal policy that supports renewable fuels will help provide stability, promote growth, and lessen our dependence on foreign oil."
There are 88 plants in the nation producing an estimated 200 to 250 million gallons of biodiesel in 2006. That's triple last year's production of 75 million gallons.
Biodiesel's benefits are documented by an economic study that the NBB released in November. According to the economic analysis by John M. Urbanchuk of LECG and funded by the soybean checkoff through the United Soybean Board, the aggregate economic benefits of biodiesel include:
--America's biodiesel industry will add $24 billion to the U.S. economy between 2005 and 2015, assuming biodiesel growth reaches 650 million gallons of annual production by 2015.
--Biodiesel production will create a projected 39,102 new jobs in all sectors of the economy.
--Additional tax revenues from biodiesel production will more than pay for the federal tax incentives provided to the industry. It will keep $13.6 billion in America that would otherwise be spent on foreign oil. This total impact of biodiesel on the economy includes the temporary impacts of construction, the permanent impacts of annual production and the direct value of biodiesel and co-products (glycerine).
The incentive is a volumetric-based tax credit aimed at helping lower the cost of biodiesel to consumers who pay road taxes, such as truckers, and in tax exempt markets, such as school districts. Since taking effect, the incentive has been the primary stimulant for a dramatic increase in new plants and jobs in biodiesel, bringing economic opportunities to rural and urban areas.
The Jan. 4 bill mirrors legislation that Pomeroy and Hulshof introduced in June 2003. It removes sunset provisions for ethanol and biodiesel incentives that accompanied the Volumetric Ethanol Excise Tax Credit, which took effect Jan. 1, 2005. It also makes permanent a small agri-biodiesel producer credit.