http://biodieselmagazine.com/articles/2513046/senate-bill-introduced-to-extend-reform-us-biodiesel-tax-credit
Senate bill introduced to extend, reform US biodiesel tax credit
By Ron Kotrba | April 30, 2017
U.S. Sens. Chuck Grassley, R-Iowa, and Maria Cantwell, D-Washington,
introduced a bipartisan bill to renew the $1-per-gallon biodiesel tax
credit for three years and to reform it from a blenders incentive to a
domestic producers tax credit. Along with Grassley and Cantwell, the
legislation, called the American Renewable Fuel and Job Creation Act of
2017, has 14 other original sponsors from both sides of the aisle.
The bill also provides an additional 10-cent-per-gallon credit for small
U.S. biodiesel producers.
“The biodiesel tax credit already has a sterling track record of
reducing emissions and greening our economy, removing the equivalent of
16 million cars from the road,” said Cantwell. “This legislation will
remove millions more cars while promoting energy independence, saving
taxpayer dollars, and accelerating by up to 45 percent the creation of
clean energy jobs in the domestic biodiesel production industry.”
“U.S. tax policy should support U.S. products and U.S. jobs,” Grassley
said. “This bipartisan bill would end a system that gives many foreign
producers a leg up over U.S. producers and give certainty to the
biodiesel industry, which is responsible for employing thousands of
Americans. U.S. producers shouldn’t be put at a disadvantage by foreign
producers that in many cases are double dipping by benefiting from U.S.
tax incentives on top of their own significant government subsidies.
These reforms supporting domestic producers would also save U.S.
taxpayers money. Policies ought to encourage the production of domestic
renewable fuels to meet consumer demand and support the creation of
American jobs.”
The measure is the latest of several attempts over the past few years to
reform the biodiesel credit in order to exclude use of U.S. tax dollars
to subsidize foreign manufacturing of biodiesel and bring idled U.S.
production capacity back online. In 2016, roughly a third of the
biodiesel and renewable diesel consumed in the U.S.—or more than 900
million of nearly 3 billion gallons—came from imports that were eligible
for the $1-per-gallon tax credit. The reform would not block imported
biodiesel from entering the U.S. market, but it would rather make
imported product ineligible for the federal tax incentive. Imports would
still be eligible for incentives under the Renewable Fuel Standard in
the form of RIN credits and carbon credits under California’s low carbon
fuel standard, along with any subsidies available in the originating
countries.
“Well-crafted and efficient tax incentives can be powerful policy
mechanisms to achieve the nation’s energy objectives and to create
jobs,” said Anne Steckel, vice president of federal affairs for the
National Biodiesel Board, “but subsidizing foreign manufacturing and
hurting U.S. workers were not Congress’ intent. We applaud the senators’
bill to close this loophole by reforming the credit as a domestic
production credit. Updating this tax credit is necessary to create a
level playing field for U.S. biodiesel producers—and it has the added
benefit of saving millions of taxpayer dollars.”
The NBB also filed an antidumping and countervailing duties petition
with the U.S. Department of Commerce and the U.S. International Trade
Commission, which are currently investigating the matter, against
Argentine and Indonesian biodiesel imports. This would impose variable
tariffs on specific companies that ship biodiesel from those countries
to the U.S.
Argentine biodiesel receives reduced export tax obligations under that
country’s differential export tax regime, and NBB said without this
reform, U.S. tax policy is increasingly creating competitive disparities
in which U.S. companies are losing U.S. jobs and market share to
subsidized foreign production.
On the introduction of the legislation, Iowa Renewable Fuels Association
Executive Director Monte Shaw said, “Once again, Sen. Grassley is
leading the fight to extend and reform the federal biodiesel tax credit.
Taking these steps is vital to maximize the impact U.S. biodiesel
producers can have on powering our economy, cleaning our air and
enhancing our energy security. IRFA thanks Sen. Grassley for his
unrelenting work on leveling the playing field for U.S. biodiesel.”
Roughly half the U.S. biodiesel produced comes from soybean oil. Ron
Moore, president of the American Soybean Association and Illinois
soybean farmer, said, “This bill allows producers the security they need
to grow their operations and will help to continue biodiesel’s success
in diversifying the fuel market. This tax credit and extension is vital
to the industry’s continued growth, and will maximize the added value of
domestic production of biofuels.”
Both Grassley and Cantwell say modifying the credit is estimated to have
little to no impact on the consumer.
