Source National Biodiesel Board
The U.S. House has approved H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010, by a 215 to 204 margin (the second portion of the divided question adding a provision pertaining to Medicare physician payment updates was also adopted). The legislation retroactively extends the biodiesel tax incentive through December 31, 2010.

U.S. Senate Majority Leader Harry Reid (D-NV) has indicated his desire to have the U.S. Senate consider tax extender legislation when the U.S. Senate reconvenes the week of June 7, 2010.

Both the U.S. House and U.S. Senate will be adjourned the week of May 31, 2010. NBB’s Washington, DC office will continue to provide timely updates as events warrant when Congress reconvenes the week of June 7.

Biodiesel Public Policy Benefits: The biodiesel tax incentive has helped achieve the worthwhile policy goal of increasing the production and use of biodiesel in the U.S. In 2004, when the incentive was initially enacted, the U.S. produced 25 million gallons. In 2009, that number rose to 545 million gallons. There are compelling public policy benefits associated with the enhanced production and use of biodiesel in the U.S. Among the most are:

* The Biodiesel Industry is Creating Green Jobs and Making a Positive Contribution to the Economy;
* Biodiesel is Good for the Environment, reducing carbon pollution by up to 85 percent, according to the EPA;
* Biodiesel Reduces our Dependence on Foreign Oil.

The biodiesel tax incentive has helped achieve the desired goal of increasing the domestic production and use of biodiesel, and in turn has helped the U.S. realize the energy security, economic and environmental benefits associated with displacing petroleum with domestically produced renewable fuels. These benefits, however, will be lost if Congress does not act in a timely manner to address the immediate issue facing the industry and retroactively extend the biodiesel tax incentive.

What Can You Do?

Do you think Congress should reinstate the biodiesel tax incentive and continue to realize the economic, energy secur ity and environmental benefits that come from the production and use of biodiesel?

If your answer to this common-sense question is “yes,” then you should contact your Federal Elected officials immediately about this issue. For your Congressman, click HERE and for your Senators click HERE to get the contact information to reach out to your elected officials on this important issue.

Thank you for your support of biodiesel.

The next few months could be “make or break time” for the soy biodiesel industry in the U.S.

Biodiesel faces several challenges right now, including the high cost of the feedstock and the loss of the one dollar biodiesel blenders’ tax credit, which Congress allowed to expire on December 31^st.  Indications are that most biodiesel plants have ceased production as they await Congressional action on the tax credit, which may not happen until March.

In Iowa, the state’s Renewable Fuels Association has launched a campaign to highlight the importance of biodiesel—and renewable fuels, in general—to Iowa’s economy.  Monte Shaw is the executive director ofIRFA. “We’ve got a lot of exciting thing coming down the road for this industry—things that are going to really redefine renewable fuels for the future,” says Shaw. “Whether it’s exciting feedstock projects like the algae project at Shenandoah, or maybe it’s the biorefinery  project that’s scheduled to go into Newton.”

Good reasons, Shaw says, to keep Iowa’s biodiesel industry viable.

“If we let the current biodiesel industry wither away and lose the jobs we have today, it also means we’re not going to be the place—we’re not going to be the state—where those next generation investments and next generation jobs come either,” he says.  “So we’re really at a turning point, not just for the investors and jobs of today, but for making Iowa the place to be for the future of this industry as well.”

In addition to the federal tax credit extension, Shaw says IRFA will also be lobbying for a five percent biodiesel mandate in the Iowa legislature.

“We really do need a B5 fuel quality standard to create a low level of demand,” says Shaw. “It’s constant, it’s year-around, it’s predictable—and that’s what can help these plants cash flow during the good times and the bad times.”

A bill creating a B5 fuel quality standard passed the Iowa Senate in 2009, but time ran out before the Iowa House could consider the legislation.

The $1-a-gallon tax credit that keeps the industry afloat is due to expire Dec. 31, and lobbyists for biodiesel producers and soybean growers are scrambling to get Congress to enact an extension before lawmakers leave town for the holidays.

The House included an extension of the subsidy in a package of extensions for other business tax credits. However, the Senate has so far failed to act on the issue.

A House Democratic aide said Wednesday that there have been a “number of conversations” with Senate leaders about the issue, but that the Senate only has time to deal with health care and a defense bill. Press representatives for Senate leaders had no immediate comment on the issue.
Were the tax credit to lapse, “it would be a devastating blow to the industry,” said Michael Frohlich, a spokesman for the National Biodiesel Board.

Biodiesel plants could shut down or reduce production if the tax credit lapses, said Daniel Oh, president and chief operating officer of the Ames-based Renewable Energy Group Inc., which operates biodiesel plants in Iowa and other states.

If biodiesel production is limited, it could have a detrimental effect on the price of soybeans and other feedstocks utilized to produce biodiesel,” he said.
Biodiesel producers have been struggling to stay in business for some time because of the relatively high prices of their main feedstock, soybean oil, and the global recession, which has dampened fuel demand. They were dealt another blow early this year when the European Union imposed tariffs on imports of the U.S. product to offset the value of the tax subsidy.

U.S. biodiesel production is down 30 percent this year from 2008, and the industry is operating at about 15 percent of its production capacity.
A recent study by industry consultant John Urbanchuk warned that the “biodiesel industry could be expected to collapse” if the tax credit is removed.

With the tax credit, producers earned about 26 cents a gallon over their production costs in November.

Sen. Charles Grassley, R-Ia., said the uncertainty about the tax credit raised questions about the commitment of Democratic leaders to alternative fuels.

“This lack of action so far is especially inexcusable, considering the House and Senate have been in session nearly continuously for months,” he said.
John Hoffman of Waterloo, a former president of the American Soybean Association, said the tax credit is “essential to the continuation of the biodiesel industry.”