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| US legislation may make tax rebates on biofuels permanent |
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| Saturday, 24 June 2006 | |
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Congressmen Kenny Hulshof (R-MO) and Earl Pomeroy (D-ND) have introduced the Renewable Fuels and Energy Independence Promotion Act, which would make the federal excise tax credit for biodiesel permanent. If adopted, the move would likely lead to dramatic and sustained growth of biodiesel use.
The National Biodiesel Board (NBB), which played a role in getting the incentive passed and extended, applauded Hulshof, Pomeroy and their co-sponsors for the new legislation.
“Making the biodiesel tax incentive permanent would be a powerful signal for U.S. energy policy,” said Joe Jobe, CEO of NBB.
“It would encourage Americans to use less petroleum. Biodiesel is a renewable energy source that works with current and future diesel engines using the nation’s existing liquid fuel infrastructure, so it has great potential to immediately help address our energy concerns.”
The tax credit, which took effect in 2005, currently will expire in 2008. The incentive is a volumetric based tax credit aimed at helping lower the cost of biodiesel to consumers who pay road taxes, such as truckers, and in tax exempt markets, such as school districts.
Since taking effect, the incentive has been the primary stimulant for a dramatic increase in new plants and jobs in biodiesel, bringing economic opportunities to rural and urban areas.
Today, there are 65 operational biodiesel plants, while 50 more are under construction.
"Federal policy should strive to reduce our dependence on foreign oil,” said Rep. Hulshof.
“Domestically produced renewable fuels must play an integral role in a plan to promote energy independence. If renewable fuels are to displace significant amounts of petroleum as transportation fuel, we must take bold, aggressive steps to achieve this end.
"Expanded use of biodiesel will help make America more energy independent and the nation as a whole will reap the benefits.
“Renewable fuels are a critical component to our nation becoming more energy independent,” Rep. Pomeroy said.
“By making the tax credits for biodiesel and ethanol permanent, we are providing the stability these emerging industries need to grow. North Dakota has seen first hand the positive impact these tax credits can have in building these industries and this bill ensures those same benefits will continue to be available.”
The bill removes sunset provisions for ethanol and biodiesel incentives that accompanied the Volumetric Ethanol Excise Tax Credit (VEETC), which took effect Jan. 1, 2005.
It also makes permanent a small agri-biodiesel producer credit. Biodiesel has become the fastest growing alternative fuel in the country, with 75 million gallons sold in 2005. That’s up from 500,000 gallons in 1999.
The industry is on track to sell 150 million gallons in 2006.
It’s possible the legislation could become part of an energy package that might be on the floor in the House as soon as next week.
Several bills have been introduced in the Senate to extend these tax credits, including S. 2401 by Sen. Chuck Grassley (R-IA), Chairman of the Senate Finance Committee.
The U.S. Department of Energy and the U.S. Department of Agriculture in 1998 performed the prevailing life cycle study of the energy balance of biodiesel.
It found that for every one unit of fossil energy used in the entire biodiesel production cycle, 3.2 units of energy are gained when the fuel is burned, or a positive energy balance of 320 percent.
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