Both the House and Senate have introduced legislation to extend the biodiesel tax incentive to 2010. Unless Congress passes an extension, the current biodiesel tax incentive, which took effect on January 1, 2005, will expire on December 31, 2006.
The American Soybean Association has been pushing hard for the tax incentive, which amounts to a penny per percentage of biodiesel blended with conventional diesel, to be included in a comprehensive energy bill. After Congress' failure to pass an energy bill the last several years, Sen. Chuck Grassley, R-Iowa, was able to include the tax incentives in the JOBS Act of 2004.
As it expires at the end of 2006, its extension is the top legislative priority of the American Soybean Association. Representatives Kenny Hulshof, R-Mo., and Earl Pomeroy, D-N.D., introduced legislation in the House on Thursday that extends the tax credit. Senators Blanche Lincoln, D-Ark., and Jim Talent, R-Mo., introduced an identical extension of the biodiesel tax incentive in the Senate.
Earlier this week, soybean producers were elated to hear President George W. Bush clearly articulate the role soybean farmers will play in the nation's future energy policies. In his May 16 remarks at a biodiesel refinery in West Point, Virginia, President Bush said, "Biodiesel is one of our nation's most promising alternative fuel sources. And by developing biodiesel, you're making this country less dependent on foreign sources of oil."
"President Bush said that our dependence on imported oil is like a foreign tax on the American dream," ASA President Neal Bredehoeft says. "We all need to work together to find alternative solutions to this predicament and soybean farmers are prepared to do their part to help make this country less dependent on foreign oil by producing homegrown biodiesel."
By its very nature, diesel contains 20% more energy in a gallon of fuel than a gallon of gasoline. In the U.S., millions of trucks and buses already burn diesel fuel, as do railroad locomotives, commercial marine vessels, construction and agricultural equipment. These vehicles can, with few or no modifications, utilize biodiesel-blended fuels, which reduce the country's dependence on imported petroleum.
"Biodiesel offers many environmental and operational benefits as well," Bredehoeft adds. "It has the highest energy content of any alternative fuel, which is especially important in heavy-duty diesel applications."
Independent studies show that the use of biodiesel in conventional diesel engines results in a substantial reduction of emissions, including carbon dioxide and other air toxics. Moreover, it increases the lubricity of diesel, which is especially valuable when the sulfur content of diesel is reduced. Biodiesel is the only alternative fuel to have passed the rigorous Health Effects testing requirements of the Clean Air Act, and it is nontoxic, biodegradable and free of sulfur.
The biodiesel tax incentive is structured as a federal excise tax credit. It will lower the cost of biodiesel to consumers in taxable and tax exempt markets. Based on baseline estimates from the U.S. Department of Agriculture for future soybean production, over a five-year time period the biodiesel tax provisions could add almost $1 billion directly to the bottom line of U.S. farm income. In addition, the provisions will significantly benefit the U.S. economy and could increase U.S. gross output by almost $7 billion.
"ASA's main goal is to have this extension legislation in circulation with the intent that it will be included in a final energy bill," Bredehoeft says. "We are confident that our champions in Congress will help us achieve this vitally important goal."