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National Biodiesel Board Applauds House Biodiesel Bill That Closes Loophole, Saves Taxpayer Dollars and Creates U.S. Jobs

May 05, 2017
Noem-Pascrell bill would modify the biodiesel tax credit to a producers credit through 2020


Contact: Rosemarie Calabro Tully

WASHINGTON, D.C. – Today the National Biodiesel Board applauded the introduction in the U.S. House of Representatives of a bipartisan biodiesel tax credit 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 2017, 2018, 2019 and 2020. The bill, H.R. 2383, led by U.S. Representatives Kristi Noem (R-S.D.) and Bill Pascrell (D.-N.J.), provides an additional 10-cent-per-gallon credit for small U.S. biodiesel producers. Companion legislation was recently introduced in the U.S. Senate by Senators Chuck Grassley (R-Iowa) and Maria Cantwell (D-Wash.).

We are thrilled to see momentum building in both chambers of Congress for this important tax reform. It is long overdue to close this loophole and better align the incentive with Congress' intent—to invest American taxpayer dollars to spur job creation here at home. We look forward to working with Congress to move this proposal forward,” said Anne Steckel, vice president of federal affairs at the National Biodiesel Board. After all, the U.S. biodiesel industry supports more than 50,000 jobs.

This bipartisan bill seeks to reinstate the biodiesel and small producers tax credits that expired at the end of 2016, but with a change to who is eligible for the credit. Previously, the tax credit was open to blenders of biodiesel, but this legislation would provide tax credits to U.S. producers instead of blenders. Doing so prevents subsidization of foreign manufacturers.

Taxpayer dollars and U.S. energy policy should be—and typically are—aimed at incentivizing domestic production, not foreign production. The current structure of the biodiesel tax incentive as a blender’s credit increasingly allows foreign producers to access the credit if their fuel is blended in the United States. Importantly, this reform would not block imported biodiesel from entering the U.S. market; in fact, significant imports would likely continue coming to the U.S. and receiving incentives under the RFS and California’s Low Carbon Fuel Standard.

U.S. biodiesel producers just need a level playing field to compete with foreign production. For example, since 2009, the European Union has levied duties on U.S. biodiesel that effectively block U.S. biodiesel from entering the European market. At the same time, U.S. policy is incentivizing European biodiesel shipments to the U.S. by rewarding it with the $1-per-gallon credit. Additionally, Argentinian biodiesel that receives significant incentives under that country’s Differential Export Tax regime is increasingly being shipped to the U.S. market where it also can qualify for the U.S. tax incentive. Without this reform, U.S. tax policy is increasingly creating competitive disparities in which U.S. companies are losing U.S. market share to subsidized foreign production in Europe, Argentina and other nations.

Changing the structure of the tax credit also would save taxpayers millions of dollars. Biodiesel imports to the U.S. 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).

The Senate version was introduced by U.S. Senators Chuck Grassley (R-Iowa) and Maria Cantwell (D-Wash.), with 14 other original cosponsors, including Pat Roberts (R-Kan.), Heidi Heitkamp (D-N.D.), John Thune (R-S.D.), Sheldon Whitehouse (D-R.I.), Martin Heinrich (D-N.M.), Joni Ernst (R-Iowa.), Joe Donnelly (D-Ind.), Roy Blunt (R-Mo.), Mazie Hirono (D-Hawaii), Al Franken (D-Minn.), Patty Murray (D-Wash.), Amy Klobuchar (D-Minn.), Tom Udall (D-N.M.) and Jeanne Shaheen (D-N.H.). The House version was also cosponsored by Rep. Dave Loebsack (D-Iowa).


For more about the National Biodiesel Board, visit www.nbb.org