In addition to the overarching priorities identified in the ag coalition letter sent this week, ASA submitted separate comments to the Senate Finance Committee in support of the continuation and restructuring of the biodiesel tax credit.

Other groups, including the National Biodiesel Board and American Farm Bureau submitted comments in support of the biodiesel tax credit as well.

The biodiesel tax credit has only been in place since 2005 and has helped biodiesel production grow from 100 million gallons to more than 1.7 billion gallons during that span. This is despite the inconsistency created from the cycle of expiration and retroactive reinstatement of the credit in four of the past six years. Continuation of the credit is needed to follow through on the investment that has been made and to more firmly establish the young biodiesel industry in the marketplace where it competes with the entrenched petroleum industry.

ASA also strongly supports restructuring of the biodiesel tax credit to a production credit. This change would further support domestic biodiesel production versus imported biodiesel, improve administration of the incentive, eliminate potential abuses and improve tax compliance.  ASA has advocated for this change for several years, but the political climate and delicate status of the “tax extender” package has made Congress unwilling to make policy changes to any of the tax credits.

The recent Environmental Protection Agency (EPA) approval of a streamlined Renewable Fuel Standard (RFS) compliance process for Argentine biodiesel increases the urgency of restructuring the tax credit.

Shifting from a blender’s credit to a domestic producer’s credit would eliminate the ability of foreign produced biodiesel to claim the credit. Under the current blender’s credit structure, most imports are eligible to take the tax credit. The change to a domestic production credit would also have the benefit of reducing its cost the U.S. treasury, since imported fuel would no longer be eligible.

The fate of the biodiesel tax credit and all of the “tax extenders” are once again in limbo as efforts on tax reform play out.