Tax Incentive Action Page

Fueling Action Center ::

Winter 2018

Biodiesel Tax Incentive

The biodiesel tax incentive has played a key role in stimulating growth in the U.S. biodiesel industry in recent years, helping biodiesel become the leading advanced biofuel in the nation. By making biodiesel more cost-competitive with petroleum diesel, the $1-per-gallon credit creates jobs, reduces harmful emissions, diversifies the fuels market and strengthens U.S. energy security.

Nonetheless, Congress has allowed the incentive to expire repeatedly in recent years, most recently on December 31, 2016. In a February spending deal, the credit was renewed retroactively for 2017, leaving the credit expired for 2018.

We urge Congress to extend the incentive for at least 2018 as soon as possible to provide certainty to the market. Here’s why:

  • The Tax Incentive Works. The U.S. biodiesel and renewable diesel market has grown from about 100 million gallons in 2005, when the incentive was first implemented, to nearly 2.9 billion gallons in 2016. Biodiesel producers across the country have tremendous capacity for growth.
  • Stability Helps. Traditional oil and gas incentives never expire, and some have been in place for more than 100 years. In contrast, the biodiesel incentive has repeatedly expired—in 2006, 2008, 2009, 2011, 2013, 2014 and 2016. Often, the credit is retroactively extended and reinstated, but the industry is operating without a credit for 2018 and beyond. This raises costs for consumers and disrupts producers’ access to capital, as well as their ability to hire and expand. Consistent, longer-term tax policy would provide a clear signal to investors and stimulate further growth in the industry.
  • Jobs Are Created, Economies Grow. With biodiesel plants nationwide—from California to Iowa to North Carolina—the biodiesel industry already supports roughly 64,000 jobs, $11.42 billion in economic impact and $2.54 billion in wages paid. In many rural areas of the country, biodiesel plants are a driving force of the local economy, supporting the employment of technicians, plant operators, engineers, construction workers, trucks drivers and farmers, to name a few.
  • America Benefits from Improved Air Quality and Less Waste. Biodiesel is made from an increasingly diverse mix of resources such as recycled cooking oil, plant oils and animal fats. Biodiesel reduces wastes and most major air pollutants. The EPA has recognized its environmental benefits by classifying it as an advanced biofuel, making biodiesel the leading commercial-scale U.S. fuel produced nationwide to meet the agency’s criteria. According to the EPA, biodiesel reduces greenhouse gas emissions by 57 to 86 percent when compared to petroleum diesel.
  • There’s Diversity in the Home Heating Oil Market. The U.S. biodiesel industry has invested millions of dollars and spent years to help build the Bioheat® market, particularly in the Northeast, where biodiesel is increasingly blended into home heating oil to create a cleaner product.
  • Energy Security Is Enhanced. Biodiesel is diversifying our fuel supplies so that we are less dependent on global oil markets that are influenced by unstable regions of the world and global events beyond our control. Despite increased domestic oil production, consumers will remain vulnerable to volatile international oil prices without diversity and competition in the fuels market.

What is biodiesel? And who is the National Biodiesel Board?

Made from an increasingly diverse mix of resources such as recycled cooking oil, soybean oil and animal fats, biodiesel is a renewable, clean-burning diesel replacement that can be used in existing diesel engines without modification. It is the nation’s first domestically produced, commercially available advanced biofuel. The National Biodiesel Board is the U.S. trade association representing the biodiesel and renewable diesel industries, including producers, feedstock suppliers and fuel distributors.