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  • Writer's pictureRon Kotrba

US House, Senate both introduce bills to extend biodiesel tax credit through 2025

Updated: May 31, 2021

Bipartisan, bicameral legislation was introduced May 25 in the United States Congress to extend the $1 per gallon blenders tax credit for biodiesel and renewable diesel through 2025. Currently, the incentive is set to expire in a year and a half, at the end of 2022.

Chuck Grassley, R-Iowa, and Maria Cantwell, D-Washington, introduced the Biodiesel Tax Credit Extension Act of 2021 in the Senate while Cindy Axne, D-Iowa, and Mike Kelly, R-Pennsylvania, introduced a companion bill into the House of Representatives. Other measures have been introduced recently that would also extend the credit but would reduce its per-gallon value and phase it out after a few years. The new bills introduced would keep the full value of the credit through 2025, providing the biobased diesel industry policy certainty for an additional three years, supporting continued growth in clean, low-carbon fuels.

“The biodiesel tax credit has proven to work by reducing our dependence on foreign oil and lowering greenhouse gas emissions,” Grassley said. “Many Iowans, farmers and processors alike, work hard to provide clean, renewable energy. The biodiesel industry employs more than 60,000 Americans, including thousands of Iowans. I’m glad to author this legislation, which would extend the biodiesel tax credit through 2025. This extension would provide important, longer-term stability for them and their communities.”

As former chairman of the Senate Finance Committee, Grassley led the effort to include several temporary tax policies in the 2019 year-end spending package including the multiyear extension of the biodiesel tax credit through 2022, which was passed retroactively to include 2018 and 2019 as well—the longest extension of the incentive in its 15-year history.

Within her first weeks in Congress, Axne was advocating for a revival of the biodiesel tax credit after its expiration in 2016. Like Grassley in the Senate, Axne led efforts in the House to see the biodiesel tax credit reinstated in 2019.

“Backing clean biodiesel means supporting and expanding an American industry that fuels our society while reducing carbon emissions,” Axne said. “As Congress is engaged in discussions about how to invest in clean energy infrastructure while growing our economy, continued support for biodiesel will keep us on a pathway that has kept millions of tons of carbon out of our air and put over 65,000 Americans to work. Since coming to Congress two years ago, support for Iowa’s producers and farmers through measures like the biodiesel tax credit has been a top priority for me—and I am ready to work with my colleagues across Congress to once again see this key support signed into law.”

Rep. Kelly from Pennsylvania said, “Biodiesel is an important part of the energy sector, and an industry that is creating well-paying jobs in many rural communities throughout America including Erie, Pennsylvania. It’s critical that we extend the biodiesel tax credit to further encourage economic growth, enhance U.S. energy security, and foster innovation that is good for our environment. I am a proud sponsor of this bill. Let’s offer the same tax incentives to the biodiesel industry that we offer to other energy producers.”

The biodiesel tax credit continues to be very successful in expanding consumer access to clean, low-carbon fuels, said Kurt Kovarik, vice president of federal affairs for the National Biodiesel Board. “Biodiesel and renewable diesel are on average 74 percent less carbon intensive than petroleum diesel and have cut more than 140 million tons of carbon emissions since 2010,” he said. “Moreover, these cleaner, better fuels substantially cut emissions of particulate matter that impact cancer rates, asthma and other respiratory diseases, as well as the associated healthcare costs. As Congress looks to jumpstart economic growth, rebuild infrastructure and reduce carbon emissions, they can count on biodiesel and renewable diesel to help achieve those goals. Biodiesel production is supporting economic opportunities and job creation in rural communities across the country. NBB’s members sincerely thank Sens. Grassley and Cantwell and Reps. Axne and Kelly, along with the 33 original cosponsors.”

Iowa has much to gain from a thriving biofuels industry, said Grant Kimberley, executive director of the Iowa Biodiesel Board, “as it has become inextricably linked to our economic growth and the viability of our many farms. We are grateful to Sen. Grassley for his sustained leadership in advocating for stability in this vital biodiesel tax credit.”

The biodiesel tax credit kickstarted commercial biodiesel production in 2005 from a niche market to a multibillion-gallon industry. The U.S. biodiesel and renewable diesel industry supports 65,000 U.S. jobs and more than $17 billion in economic activity each year, according to NBB. Every 100 million gallons of production supports 3,200 jobs and $780 million in economic opportunity. Biodiesel production supports approximately 13 percent of the value of each U.S. bushel of soybeans.

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