Producers of biodiesel could continue to get tax breaks
until 2017, and federal officials say that will help ensure a competitive price
at the pump for renewable fuels.
A bill introduced Wednesday, March 14, in the U.S. Senate
would extend the existing $1-per-gallon federal excise tax credit and income
tax credit on pure biodiesel by 10 years.
The intent of the law, which dates back to 2004, has been to
entice producers to build more plants and add capacity, National Biodiesel
Board spokeswoman Amber Pearson told Land
She said lower production costs help the producers pass
savings on to retailers.
"Retailers can then pass that down to consumers," Pearson
Sen. Blanche Lincoln, D-AR, and Sen. Norm Coleman, R-MN,
filed the bill to extend the program, hoping the tax credit will not end. If it
were to end, it would leave biodiesel producers struggling to compete in a
market dominated by petroleum diesel.
"Our American agricultural producers and domestic companies
have demonstrated their commitment to energy independence through the
production of renewable fuels like biodiesel," Lincoln stated in a press
Biodiesel refers to fuel made from vegetable oils, animal
fats or recycled restaurant grease. It can be blended with petroleum diesel up
to 20 percent with no significant modifications needed to a truck engine or
The tax incentive leads to a credit of up to $1 per gallon
of pure biodiesel above the rack. For bio and petroleum blends, it translates
to a penny per percentage point of biodiesel in a gallon.
"It's a dollar per gallon of pure biodiesel," Pearson said.
"At a 20-percent level, that would be 20 cents (per gallon of B20)."
- By David Tanner,