• The National Biodiesel Board

Report shows environmental, economic benefits of biodiesel tax incentive far outweigh costs


The National Biodiesel Board welcomed the release of a new report, “The Economic Benefits of the Biodiesel Blenders' Credit,” from Capital Policy Analytics. The report calculates annual economic benefits of $15 billion and environmental benefits of $4.3 billion from U.S. biodiesel production. In 2020, the U.S. market for biodiesel and renewable diesel reached 3 billion gallons with support from the $1-per-gallon tax incentive.


The current tax credit expires at the end of 2022 and data show letting it expire would harm the U.S. economy and the environment, the report states.


“A significant body of research also demonstrates that the biodiesel tax credit easily passes a cost-benefit analysis, and that the environmental benefits alone from each gallon of biodiesel that replaces petrodiesel exceed $2 a gallon, or more than double the cost of the credit,” according to the report.


The U.S. biodiesel and renewable diesel industry supports 65,000 U.S. jobs and more than $17 billion in economic activity each year. Every 100 million gallons of production supports 3,200 jobs and $780 million in economic opportunity. The new report estimates that expiration of the tax incentive would eliminate as many as 3,000 jobs in the biodiesel and renewable diesel industry. The total employment loss throughout the supply chain associated with production would be between 7,500 and 9,000 jobs.


Moreover, the report finds that in 2019, use of biodiesel reduced U.S. greenhouse gas emissions by nearly 18 million metric tons. The cumulative greenhouse gas emission reduction since the inception of the biodiesel tax incentive is more than 100 million metric tons.


The authors of the report write, “We believe that ending the credit in 2022, when the current legislation providing for it expires, would be inadvisable and would likely devastate the market, resulting in the destruction of thousands of jobs, an increase in greenhouse gas emissions and other local air pollutants, and the undoing of much of what the previous 17 years accomplished—namely, the establishment of a robust market for an important fuel and an essential tool for reversing climate change.”


Kurt Kovarik, NBB’s vice president of federal affairs, stated, “This report demonstrates how remarkably effective the tax incentive has been in supporting the emergence of biodiesel and renewable diesel. As more and more American consumers demand better, cleaner fuels, a long-term and forward-looking tax incentive can help the industry sustainably grow and diversify. We appreciate the bipartisan support in Congress for continuing this policy.”


Click here to access the report.


Biodiesel production supports approximately 13 percent of the value of each U.S. bushel of soybeans.

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