American Soybean Association leaders and other biofuel supporters are planning a push to make the biodiesel tax credit retroactive to Jan. 1 since the existing credit will expire at midnight tonight (Dec. 31).
The House passed a one-year extension of the credit in early December, but the Senate failed to pass companion legislation because of its focus on health care reform legislation. Industry leaders say a number of biodiesel plants will be forced to shut down without the incentive.
“While the lapse in the tax credit will deal a severe blow to the U.S. biodiesel industry, ASA will continue to work to reinstate the credit retroactively in 2010,” a spokesman for the organization said. “ASA, state soybean associations, and the biodiesel industry will press for quick action to extend the biodiesel tax incentive when Congress returns.”
“Biodiesel has provided a significant market opportunity for U.S. soybean farmers, as well as jobs and economic development for rural communities, and ASA is proud of its role in establishing the U.S. biodiesel industry,” said ASA President Rob Joslin, a soybean producer from Sidney, Ohio.
Joslin said studies have shown biodiesel accounts for about 25 cents per bushel of the price farmers currently receive for their soybeans and could have even more of an impact if Congress would extend the credit for five years and bring added stability to the industry.
Shortly after it became apparent the Senate would not vote on an extension of the biodiesel tax credit, Sens. Max Baucus and Charles Grassley, the chairman and ranking member of the Senate Finance Committee, sent a letter to Congressional leaders informing them they intend to address the expiring biodiesel tax credit as early as possible in January.
“With our letter, we’re trying to un-do some of the terrible damage that’s been done to biodiesel producers by the fact that the leaders of Congress are letting the biodiesel tax credit expire on Dec. 31,” Grassley said.
“This tax credit is non-controversial and had broad-based support. It could have passed as a stand-alone bill at any time during the whole year. Instead, its extension has been held hostage by Senator Harry Reid and Speaker Pelosi in order to try to get other more controversial tax policy through.”
Grassley, a Republican from Iowa, said as many as 23,000 jobs could be lost if nothing is done on the tax incentive or other regulatory delays at the Environmental Protection Agency. Iowa is one of the biggest biodiesel producing states in the country, with 15 facilities.
All together, 44 states have some biodiesel production. “These are green jobs that are good for both the environment and the economy,” Grassley noted. “Without the tax incentive, biodiesel blends will be priced out of the marketplace and oil companies will stop purchasing biodiesel.”
The Iowa senator authored the biodiesel tax credit as chairman of the Senate Finance Committee four years ago when Republicans controlled both houses of Congress. He and Sen. Maria Cantwell, D-Wash., authored a bill that would have extended the $1 per gallon credit for one year, but they were unable to attach it to legislation that could be passed before Dec. 31.