Biodiesel tax credit revival sought
Updated: Saturday, April 10, 2010 10:29 AM
Battered industry demands Congress take action
By MATTHEW WEAVER
An effort in the U.S. Senate may resurrect a tax credit considered vital to the future of the biodiesel industry.
Sen. Max Baucus, D-Mont., has proposed an amendment to a House-passed bill to extend the biodiesel tax credit, said Michael Frohlich, director of federal communications for the National Biodiesel Board.
The $1-per-gallon tax credit expired Dec. 31.
Resumption of the tax credit will allow some biodiesel plants to resume or boost production and increase demand for soybeans, canola and camelina.
Roughly 60 percent of biodiesel production comes from soybeans, Frohlich said.
The House approved the tax credit extension in late 2009, but the Senate allowed it to lapse because of negotiations over health care reform, Frohlich said.
Baucus' amendment to resurrect the tax credit would be retroactive to Jan. 1.
Frohlich said the industry needs the credit now. Without it, layoffs and biodiesel plant closures will continue.
"Production's at a minimal scale at best, at zero in some of the worst cases," he said. "There's 23,000 jobs currently on the hook if that extension continues to lapse."
Steve Starr, general manager of the Odessa, Wash.-based Inland Empire Oilseeds, said his company continues to operate in anticipation of the tax credit's passage.
"We believe the chances are nearly 100 percent that a Democratic Congress is not going to let alternative energy basically die on their watch," Starr said. "We continue to operate, but there are other companies who have actually shut down and quit selling biodiesel."
As long as a retroactive incentive is in place before mid-April, there will be no cash-flow effect, as the company files for its tax credit on a quarterly basis, he said.
The Senate may make a decision on the amendment by the end of this week, Frohlich said.
"It's a matter of getting the bill into the nearest piece of legislation they can get it into," Starr said.
He hopes to have a bill out of the Senate by the end of March.
The Senate bill must then be reconciled with the House version and go to President Barack Obama for his signature.