Legislation contains provisions designed to boost production of biodiesel.

April 25, 2002… Saint Louis, Missouri… The American Soybean Association (ASA) applauds the U.S. Senate for approving the Comprehensive Energy Bill. The measure, approved today by a vote of 88-11, contains several provisions that would benefit U.S. soybean growers by increasing the production of biodiesel. Biodiesel is a clean-burning alternative to petroleum-based diesel fuel that is produced primarily from soybean oil.

"ASA would like to extend its sincere thanks to the Senate for a job well done," stated ASA President Bart Ruth from his farm in Rising City, Nebraska. "With today’s vote, we’re one step closer to getting a Comprehensive Energy Bill signed into law that contains strong biodiesel provisions. This is good news for Americans and good news for U.S. soybean farmers."

Included in the Senate Energy Bill are a number of provisions that are designed to encourage the use of biodiesel. They are:

• Biodiesel Tax Incentive – The Senate Energy Bill creates a tax incentive for biodiesel. Under its terms, blenders of biodiesel would receive a 1-cent reduction in the diesel excise tax for every percentage of biodiesel blended with conventional diesel up to 20 percent. This provision provides for the reimbursement of the Highway Trust Fund by the U.S. Department of Agriculture’s (USDA) Commodity Credit Corporation (CCC). The tax provision was authored by U.S. Senators Blanche Lincoln (D-AR) and Chuck Grassley (R-IA) and is similar to legislation introduced by Senators Tim Hutchison (R-AR) and Mark Dayton (D-MN), S. 1058.

• Renewable Fuels Standard – Senate Energy Bill contains a 5 billion gallon renewable fuels standard, of which biodiesel would be an eligible fuel. The renewable fuels standard is similar to legislation introduced by U.S. Senators Chuck Hagel (R-NE) and Tim Johnson (D-SD).

• EPACT – Senate Energy Bill was amended to encourage government fleets to use more biodiesel to meet current energy requirements. The Energy Policy Act (EPACT) of 1992 requires most federal, state and public utility companies to have a certain amount of alternative fuel vehicles (AFVs) in their fleets. The EPACT was amended in 1998 to allow covered fleets to receive credit for using biodiesel, although they could only get 50 percent of their credit for doing so. This amendment, offered by Senators Kit Bond (R-MO) and Blanche Lincoln (D-AR), removes the 50 percent limit for government fleets.

• Federal Fleet Use – The legislation also requires federal government fleets to use biodiesel and ethanol when they are cost competitive. Senators Dayton and Grassley supported this provision.

Due to the large surplus of soybean oil in the world market, soybean prices are nearing historic lows. U.S. soy oil stocks are currently at a record high of 2.5 billion pounds, which helps explain why soybean oil prices are at their lowest point since 1997.

Biodiesel offers the greatest potential for removing this surplus from the market, which will help raise the price farmers are paid for their soybeans. According to a USDA study, an increase of 100 million gallons of biodiesel or other soy-based byproducts per year would boost total crop cash receipts by $5.2 billion by 2010, resulting in an average net farm income increase of $300 million per year. The price of soybeans during this period would rise by as much as $.17 per bushel per year.

In addition to the lift it would give to the struggling farm economy, there are many other benefits of increased biodiesel production. For starters, as biodiesel is made primarily from soybean oil grown here in the U.S., it lessens our country’s dependence on foreign oil. There are environmental benefits of biodiesel production as well. Emissions of greenhouse gases and particulate matter would be significantly reduced by increased biodiesel use. An increased demand for biodiesel could also create 13,000 jobs across the U.S. economy.

"By including strong biodiesel provisions in their bill, the Senate has demonstrated their commitment to U.S. soybean producers. I want our friends in the Senate who helped secure these provisions to know that ASA greatly appreciates their efforts," added Ruth.

The U.S. House of Representatives approved their Energy Bill last summer. The differences between the House and Senate Energy Bills will soon be reconciled in a joint House/Senate Conference Committee.

"Biodiesel is good for our country, good for the environment and good for our farmers," concluded Ruth. "I now call on the House to show their support for soybean producers by agreeing to accept these critically important provisions in Conference."