Biodiesel Tax Credit back in US budget deal 

February 9, 2018 |

In Washington, the US Congress passed its budget deal, and among the items in the deal was a retroactive restoration of the $1 per gallon biodiesel tax credit for 2017. The bill did not include a provision for 2018 and future years.

The budget compromise had run into headwinds in the Senate, in the form of a voting delay imposed by Rand Paul of Kentucky, while opposition in the House from a group of Democrats and hardline conservatives had put the bill into some degree of jeopardy.

Renewable Energy Group CEO Randy Howard said “We are pleased that Congress recognized the importance of biomass-based diesel and its place in the value chain and passed a retroactive extension of the biodiesel mixture excise tax credit for 2017. This credit will allow needed infrastructure investments to grow the production and distribution of these valuable renewable products. However, we are disappointed that despite strong bi-partisan support, Congress did not complete the job and continue the biodiesel tax credit into the future.”

Though frustrated with the partial outcome, we would like to thank all of our supporters and champions; a large group of members worked tirelessly on our behalf and we appreciate their efforts.  Specifically, we would like to thank Sen. Grassley, Sen. Cantwell and their allies for their unwavering support for our industry.

“We are pleased our supporters in Congress continue to recognize the value the biodiesel tax credit brings, like lower RIN costs, continued economic development, jobs, support of our nation’s farmers and a cleaner environment.  We will continue to work alongside our elected officials and the administration on a long-term extension of the biodiesel and renewable diesel tax incentive. Doing so is not only smart energy policy, it’s smart tax policy.”

In related news, Algae Biomass Organization executive director Matt Carr noted that the “budget agreement establishes a $35 per ton tax incentive for carbon captured and recycled from power plants or industrial facilities using algae or other biologically-based carbon capture and use (CCU) systems.”

The bill adds algae and a number of other CCU approaches to the existing section 45Q Carbon Capture and Storage (CCS) tax credit, which was previously available only to geologic storage and enhanced oil recovery (EOR) projects. It also substantially increases the credit rate from the previous $10 a ton to $35 a ton, extends the credit for up to 12 years, and expands the universe of eligible CO2 sources to include industrial and air capture facilities in addition to fossil power plants.

Many took issue with the short-term nature of the tax credit work. The American Biogas Council Executive Director Patrick Serfass said:

“While we are grateful to the many members of Congress who continued support the development and deployment of renewable energy sources in general throughout the U.S., we are extremely disappointed that the Bipartisan Budget Act of 2018 continues to pick winners and losers in renewable energy and put new biogas systems at an economic disadvantage, stifling clean energy growth and investment.

“By not extending the credit for biogas into the future, the Act will virtually kill the development of new biogas-electricity projects by giving a 30% advantage to many other renewable electricity projects. Biogas systems don’t just produce renewable energy, jobs and investment, they also provide a solution for managing waste, nutrient recycling and reducing odors while protecting our air, water and soil in urban and rural America. Unless tomorrow all of urban and rural America decides to go vegan, stop flushing our toilets and start eating spoiled food and things like onion peels and pineapple tops, we will need biogas systems to manage all of this material and turn it into great soil products and renewable energy. It is simply unconscionable that Congress continues to pick winners and losers by incentivizing the development other renewable energy technologies and fossil fuels but not biogas systems.

Grant Kimberley, executive director of the Iowa Biodiesel Board, added:

“Our state’s biodiesel producers are relieved to have the biodiesel tax credit restored for 2017. And while we are thankful Congress passed that, the fact that it was not extended into 2018 leaves these businesses in the same precarious situation of having to roll the dice with their business decisions, betting on whether it will come back for 2018. We are disappointed in this. ”

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