U.S. proposes biodiesel tax credit for producers

28.04.2017

U.S. congressional leaders have introduced a bipartisan bill that would convert the blender’s credit for biodiesel to a $1-per-gallon production credit for fuels produced in the United States for three years.

The bill also provides an additional 10-cent-per-gallon credit for small U.S. biodiesel producers. The previous biodiesel tax credit expired at the end of 2016, and was open to blenders of biodiesel.

The new legislation would provide tax credits to U.S. producers, which the National Biodiesel Board (NBB) said would prevent subsidization of foreign manufacturers, instead of to blenders.

“Well-crafted and efficient tax incentives can be powerful policy mechanisms to achieve the nation’s energy objectives and to create jobs,” said Anne Steckel, vice-president of federal affairs at the National Biodiesel Board. “But subsidizing foreign manufacturing and hurting U.S. workers were not Congress’ intent. We applaud the senators’ bill to close this loophole by reforming the credit as a domestic production credit. Updating this tax credit is necessary to create a level playing field for U.S. biodiesel producers — and it has the added benefit of saving millions of taxpayer dollars.”

Changing the structure of the tax credit also would save taxpayers millions of dollars, the NBB said. Biodiesel imports to the United States have grown sharply in recent years, largely as a result of the tax credit. In 2015 alone, the U.S. Treasury spent more than $600 million on tax credits for imported biodiesel and renewable diesel. Importantly, this fuel often had already received subsidies in its country of origin (Argentina, Indonesia and the European Union, for example). According to the Joint Committee on Taxation, reforming the tax incentive would save U.S. taxpayers $90 million as imports are reduced and domestic production grows.

In mid-April, the U.S. Commerce Department initiated anti-dumping and countervailing duty investigations against Argentina and Indonesia, following a petition filed by the National Biodiesel Fair Trade Coalition, an association that includes the NBB and 15 U.S. producers of biodiesel.

Since being implemented in 2005, the biodiesel tax incentive has played a key role in stimulating growth in the U.S. biodiesel industry, the NBB said.

“This bill allows producers the security they need to grow their operations and will help to continue biodiesel’s success in diversifying the fuel market,” said Ron Moore, president of the American Soybean Association (ASA) and an Illinois soybean farmer. “This tax credit and extension is vital to the industry’s continued growth, and will maximize the added value of domestic production of biofuels.”

The American Renewable Fuel and Job Creation Act of 2017 was introduced by U.S. Senators Chuck Grassley and Maria Cantwell, with 14 other original sponsors, including Pat Roberts, Heidi Heitkamp, John Thune, Sheldon Whitehouse, Martin Heinrich, Joni Ernst, Joe Donnelly, Roy Blunt, Mazie Hirono, Al Franken, Patty Murray, Amy Klobuchar, Tom Udall and Jeanne Shaheen.


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