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Kansas Soybean Association questions use of tax incentiveBy Doug Rich A Conversation on Energy, sponsored by ConocoPhillips, made a stop in Topeka, Kan., on Sept. 26. The town hall meeting attracted people from all across the state of Kansas and covered a wide range of energy related issues. The conversation began with brief opening comments from the panel, which included Stuart S. Lowry, executive vice-president/general counsel at Kansas Electric Cooperative, Inc., and a Governor's appointee to the Kansas Energy Council; Carin Knickel, president Human Resources, ConocoPhillips; Merl Lindstrom, general manager Research and Development at ConocoPhillips; Steve Baccus, president of the Kansas Farm Bureau and Dr. Ron Hammerschmidt, director of the Division of Environment at the Kansas Department of Health and Environment (KDHE). As is usually the case with this type of meeting, most of the people who chose to speak up had comments to make and not questions to ask of the panel. The delegation from the Kansas Soybean Association was the exception. Kenlon Johannes, administrator of the Kansas Soybean Association, asked the ConocoPhillips representatives on the panel why, if ConocoPhillips is already eligible for a 50-cent credit for co-processed renewable diesel, are they trying to get the $1 incentive clearly intended for new renewable diesel and biodiesel production? "Since the petroleum industry is already heavily subsidized, are you willing to rethink your strategy of seeking additional government subsidies from the funds set aside for the development of biodiesel industry to increase our energy security, rural development and to get cleaner air?" Johannes asked. Merl Lindstrom said ConocoPhillips is trying to expand the energy portfolio in this country and it believes there is room at the table for everyone. In 2004 the JOBS Act provided a $4 per gallon tax incentive for biodiesel. One year later, the Energy Policy Act extended the biodiesel credit through 2008 and added a new $1 per gallon tax credit for renewable diesel. At the time, the credit was intended to apply to a very specific, limited technology. The Internal Revenue Service (IRS) in April 2007 issued regulatory guidance that broadly defined renewable diesel as including processes that allow integrated oil companies to add minimum amounts of animal or vegetable oils to the existing refining process. Refineries using co-processing could then claim the $1 per gallon renewable diesel credit. The National Biodiesel Board and the Kansas Soybean Association question the wisdom of directing tax benefits to existing oil refining operations at the expense of free-standing producers of biodiesel and renewable fuel. Johannes noted the IRS ruling has hurt the fundraising abilities of proposed biodiesel plants in Kansas. Later in the conversation, Eric Niemann, a Kansas soybean grower from Nortonville and chairman of the United Soybean Board, asked ConocoPhillips if they would consider using a 2 percent blend of biodiesel in their diesel fuel to improve lubricity. The lubricity factor in diesel fuel has been reduced since sulfur was removed from that fuel. Lindstrom said ConocoPhillips did not have any plans to put a 2 percent blend of biodiesel in their fuel. ConocoPhillips has been holding similar town hall meetings throughout the U.S. The Conversation on Energy town hall meeting has been to 25 cities beginning with Reno, Nev., on Jan. 17. The final stop for the event will be in Baton Rouge, La., on Nov. 13. The stop in Topeka was co-sponsored by Washburn University, The University of Kansas Energy Council and Kansas State University Center for Sustainable Energy. Doug Rich can be reached by phone at 785-749-5304 or by e-mail at richhpj@aol.com. 10/15/07 Date: 10/11/07
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