U.S. biodiesel producers today thanked a bipartisan group of lawmakers in the House and Senate for introducing legislation to extend the biodiesel tax incentive for three years, a move that would support thousands of new U.S. jobs and spur economic growth across the country.
Sponsors of the Senate bill introduced Thursday are Sens. Maria Cantwell, D-Wash.; Charles Grassley, R-Iowa; Roy Blunt, R-Mo.; Al Franken, D-Minn.; Tom Harkin, D-Iowa; Amy Klobuchar, D-Minn.; and Patty Murray, D-Wash. Reps. Aaron Schock, R-Ill., and Collin Peterson, D-Minn., introduced the bill in the House.
“These lawmakers should be applauded for recognizing the value of this incentive. It is critical for the continued growth of our industry, which is producing the first and only EPA-designated advanced biofuel being used today on a commercial scale across the United States,” said Gary Haer, chairman of the National Biodiesel Board, the industry’s trade association.
“If Congress is serious about digging our way out of this recession and creating good-paying jobs, this bill is a no-brainer,” Haer said. “It will help us create thousands of new jobs while improving the environment and displacing foreign oil with a renewable, low-carbon fuel that’s produced in virtually every state in the country.”
The legislation – the Biodiesel Tax Incentive Reform and Extension Act – would extend the $1 per gallon tax credit from 2012 through 2014, giving producers and investors critical market certainty to move forward with expansion plans. In addition, the bill would reform the biodiesel tax incentive from a blenders excise tax credit to a production excise tax credit. This common-sense change will focus the incentive on domestic biodiesel producers, make the tax program easier to administer, and help protect against waste, fraud and abuse.
A new economic study commissioned by NBB released earlier this month found that renewing the tax credit – along with the regulatory framework established last year by the EPA’s Renewable Fuel Standard program – would spur the industry into supporting more than 74,000 jobs by 2015, generating some $4 billion in household income circulating throughout the economy and $7.3 billion in GDP.
Already this year, with the tax credit renewed in December after lapsing in 2010, the industry is on pace for record production, supporting more than 31,000 jobs, with income of nearly $1.7 billion and more than $3 billion in GDP, according to the study, conducted by Cardno ENTRIX, an international consulting firm that specializes in environment and natural resources economics.
That’s an extraordinary turnaround from 2010, when the tax credit’s expiration resulted in a steep 42 percent drop in production, causing nearly 8,900 job losses, a $485 million drop in household income, and an $879 million reduction in GDP.
“Unfortunately, we don’t have to speculate about what would happen to our industry if this tax incentive goes away. We saw the fallout last year when the incentive temporarily expired. Plants closed and thousands of people were laid off. It would be a terrible mistake if Congress allowed that to happen again,” Haer said. “We are poised for a record year of production this year, and this bill would provide the market and investor certainty that the industry needs to continue building on that progress.”
Biodiesel is America’s first advanced biofuel – a renewable, clean-burning diesel replacement that can be used in existing diesel engines and meets strict specifications of ASTM D6751. Made from an increasingly diverse mix of resources such as agricultural oils, recycled cooking oil and animal fats, it is produced in nearly every state in the country and is the only commercial-scale U.S. fuel to meet the Environmental Protection Agency’s definition as an advanced biofuel.
The NBB is the national trade association of the biodiesel industry and is the coordinating body for biodiesel research and development in the U.S.