Sens Chuck Grassley of Iowa and Maria Cantwell of Washington state proposed revival and extension of the $1-a-gallon biodiesel tax credit through 2018. “This provision should be included in the tax extenders package under discussion,” Grassley said in a joint statement with Cantwell.
Some five dozen tax incentives that expired at the end of 2014 are being considered for retroactive revival from Jan 1. The Senate Finance Committee approved a bill to extend the tax breaks through 2016. Cantwell said the tax credit helped establish biodiesel as “America’s first advanced biofuel.” Along with keeping the tax credit in force through 2018, the Grassley-Cantwell bill would convert it into a domestic production credit, from the current blender credit. They said the industry is running at 60 percent capacity and has access to affordable feed stocks “to meet the demand of U.S. consumers.”
“The biggest impact of a change to a producer biodiesel credit is likely to be on imports,” said economist Scott Irwin of U-Illinois, at farmdoc daily in August. “The change to a producer tax credit would make these imports ineligible for the tax credit, and therefore, effectively subject to a $1 per gallon import tariff. This would restrict the total supply of biodiesel in the U.S. and shift a non-trivial amount of the cost of complying with the RFS biodiesel mandate from taxpayers to consumers.” Irwin estimated biodiesel imports at 500 million gallons a year. The EPA has set the 2016 biodiesel mandate at 1.9 billion gallons.