The American Soybean Association (ASA) applauds action by the Senate Finance Committee Wednesday night to include biodiesel tax provisions in its energy tax bill. The biodiesel amendment, offered by Senators Blanche Lambert Lincoln (D-AR) and Chuck Grassley (R-IA), provides a 1-cent per gallon reduction in the diesel excise tax for every percent of biodiesel included in blends with diesel, up to a maximum of 20 percent.

“This is a very important step by the Senate Finance Committee that shows a commitment to biodiesel - a renewable fuel produced by U.S. soybean farmers,” said ASA President Bart Ruth, a soybean producer from Rising City, Neb. “Biodiesel offers the greatest potential for removing surplus oil from the market, which will result in higher prices for soybeans.”

Soybean and other oilseed prices continue to be at historic lows due to large surpluses of vegetable oils in the world market. U.S. soy oil stocks are currently a record 2.5 billion pounds. Due to this large surplus, soy oil prices are down by a third since 1997, and soybean prices are about 40 percent lower per bushel.

“Low soybean prices have resulted in more than $3 billion in outlays under marketing loan programs each of the last three years,” Ruth said. “ The biodiesel tax incentive will promote additional use of biodiesel, which will remove surplus soybean oil from the market, help raise soybean prices and lower the cost of the soybean marketing loan.”

The biodiesel tax provisions will be rolled into a comprehensive energy bill that the Senate will begin debating later this week and continue debating after the President’s Day recess. Biodiesel is also an eligible fuel in a 5 billion gallon renewable standard included in the major energy package. The renewable fuel standard is similar to legislation, S. 1006, supported by ASA and introduced in the Senate by Senators Chuck Hagel (R-NE) and Tim Johnson (D-SD).

The biodiesel amendment reimburses the Highway Trust Fund from the U.S. Department of Agriculture’s Commodity Credit Corporation (CCC) to offset the loss of revenue from the biodiesel tax reduction.

The Lincoln amendment is a modified version of legislation introduced last summer by Senators Tim Hutchinson (R-AR) and Mark Dayton (D-MN). Senators Tom Daschle (D-SD) and Kent Conrad (D-ND) were also helpful during the Committee deliberations.

Co-sponsors of the original bill, S. 1058, who also assisted in building support for the Lincoln/Grassley amendment, include Senators Wayne Allard (R-CO), Jean Carnahan (D-MO), Chuck Hagel (R-NE), Paul Wellstone (D-MN), Kit Bond (R-MO), Tom Carper (D-DE), Richard Durbin (D-IL) and Tim Johnson (D-SD).

“In addition to benefiting soybean growers in the United States, increased biodiesel use supports U.S. energy independence, is good for the environment, and will help boost the U.S. economy,” Ruth said.