Legislation Includes Important Biodiesel Priorities

August 7, 2007... Saint Louis, Missouri... The American Soybean Association (ASA) praised two energy bills containing biodiesel priorities that were passed by the U.S. House of Representatives before it recessed this week. ASA has championed extension of the biodiesel tax incentive and other biodiesel provisions that were included in the Renewable Energy and Energy Conservation Tax Act (H.R. 2776) and the New Direction for Energy Independence, National Security, and Consumer Protection Act (H.R. 3221).

H.R. 2776 extends the important biodiesel tax incentive through December 31, 2010. Under current law, the incentive expires after December 31, 2008. To address the so-called “splash and dash” loophole, the bill retroactively denies the credits to fuels produced outside the United States. (Splash and dash is where foreign-made biodiesel is imported to receive the tax incentive and then exported.) Unfortunately the bill also denies the tax incentive on domestically produced biodiesel that is exported. As the bill moves forward, ASA will continue to work with Congress to address these issues in a way that does not disadvantage export opportunities for domestic biodiesel producers while the U.S. market develops.

ASA President John Hoffman, a soybean grower from Waterloo, Iowa said. “ASA applauds the House of Representatives for supporting the ASA priority of passing a biodiesel tax incentive and other biodiesel legislation. The biodiesel industry is important to soybean grower markets so we will continue to champion these programs as the House and Senate negotiate their Energy and Farm bills.”

H.R. 3221 contains ASA-supported biodiesel policies that were also approved by the House on July 27 in its version of the 2007 Farm Bill (H.R. 2419, the Farm, Nutrition, and Bioenergy Act of 2007).

The House Energy Bill authorizes and provides $1.215 billion in funds over five years for a new U.S. Department of Agriculture Commodity Credit Corporation (CCC) Bioenergy Program to support domestic production of biodiesel, cellulosic ethanol and biomass-based energy. This is a significant increase over the $150 million in annual funding provided under the previous Bioenergy Program.

“This legislation is key to the young biodiesel industry that is establishing itself as a domestic alternative energy source and a key market for soybean growers,” Hoffman said. “We hope the incentive provided under the program can be made available on all domestic biodiesel production, rather than only on additional production.”

The Energy Bill and Farm Bill also reauthorize and fund the Biodiesel Fuel Education Program, another major priority of ASA. The program supports activities ranging from enhancing fuel quality, to increasing the number of petroleum distributors carrying the fuel, to generating positive warranty position statements for biodiesel blends from automakers.

Analysis published by the U.S. Department of Agriculture (USDA) indicates that every 50 million gallons of biodiesel raises soybean prices one percent. Last year, the industry produced about 250 million gallons of biodiesel, most of it soy-based.