NBB urges Congress to extend tax incentives

By Ryan C. Christiansen | September 16, 2008
Web exclusive posted Sept. 17, 2008 at 11:56 a.m. CST

If Congress allows biodiesel tax incentives to lapse, the industry will suffer a devastating setback, according to Manning Feraci, vice president of federal affairs for the National Biodiesel Board. Feraci testified Sept. 11 before the U.S. House Committee on Small Business.

"The biodiesel blenders excise tax is structured in a manner that helps make biodiesel price competitive with conventional diesel fuel," Feraci said. "If the tax incentive is allowed to expire at the end of the year, the price of biodiesel will be significantly higher than petroleum diesel, thus significantly reducing demand and making it nearly impossible for biodiesel plants to produce fuel at a profit."

If the tax incentive is allowed to lapse, Feraci said biodiesel production in the United States will come to a halt or be severely curtailed, threatening the existence of an industry that contributed over $4.1 billion to the nation's gross domestic product and supported 21,803 jobs in 2007 – and which is expected to add $26 billion and 38,856 new jobs to the economy by 2012.

The biodiesel tax incentive, which was enacted in 2004 as part of the American Jobs Creation Act and was extended in the Energy Policy Act of 2005, is set to expire Dec. 31. Under current law, the biodiesel tax incentive is a $1 per gallon blenders excise tax credit that can be claimed on biodiesel produced from virgin vegetable oils and animal fats. Biodiesel produced from waste vegetable oils qualify for a $.50 cents per gallon excise tax credit. Proposed legislation in the U.S. House would provide a $1 per gallon incentive to blenders, regardless of the feedstock used to produce biodiesel. The legislation would also prevent the tax incentive from being claimed for imported biodiesel.
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