In June, legislation was introduced in the US Senate and US House of Representatives to extend the biodiesel tax incentive. The “Biodiesel Tax Incentive Reform and Extension Act” would extend the $1 per-gallon biodiesel tax incentive for three years, and restructure the credit from a blender’s tax credit to a producer’s tax credit.

The current tax legislation is set to expire in December and this new legislation as introduced would provide a seamless extension of the credit through 2014.

On Dec. 31, 2009, the tax incentive was allowed to lapse and legislation wasn’t passed until December of 2010. During that time many biodiesel plants were shuttered, jobs were lost, and overall production dropped to 315 million gallons. Since the credit was reinstated 2011 biodiesel production has increased and the industry is on pace to produce 800 million gallons this year.

“The biodiesel industry is a young industry,” said Joe Jobe, CEO of the National Biodiesel Board. “We’re trying to gain a foothold in a business that is and always has been dominated by fossil fuels, and breaking into that business is extraordinarily difficult.”

U.S. Sens. Maria Cantwell, D-Wash., and Charles Grassley, R-Iowa, introduced the Senate legislation (S 1277). In the House, Reps. Aaron Schock, R-Ill., and Collin Peterson, D-Minn., introduced companion legislation (HR 2238).