Biodiesel hopes dashed for hitching tax credits to FAA bill

WASHINGTON, April 14, 2016 - Biofuel producers apparently will have to wait until later in the year to find out whether their federal tax incentives are going to continue beyond this year. The industry had hoped senators would include extensions of tax credits for biodiesel and advanced biofuels in a reauthorization bill for the Federal Aviation Administration (FAA).

Biodiesel companies and soybean growers also were lobbying senators to convert the $1-a-gallon biodiesel tax incentive into a credit that goes to producers rather than to blenders. The current blenders credit benefits imported as well as domestic biodiesel. 

But Senate Republicans who are managing the FAA bill pulled the plug Tuesday afternoon on plans to include any tax provisions beyond the airline passenger user fees and other provisions directly related to aviation. Negotiations over the tax provisions “got too complicated. It was taking too long, and we’re trying to get this bill passed,” said Commerce, Science and Transportation Chairman John Thune, R-S.D. 

Thune said there would likely be a bill late in the year to which other expiring tax measures could be attached. The biofuel provisions that expire this year also include a $1.01-per-gallon subsidy for cellulosic fuels. 

Anne Steckel, vice president of federal affairs for the National Biodiesel Board, said that converting the biodiesel subsidy into a producer credit “is a common-sense reform” that “levels the playing field for U.S. producers.” 

“It really should be an easy decision for Congress, so we will continue pursuing every opportunity for advancing it in Congress. Giving business more lead time by passing it now instead of later in the year would without question create more jobs and economic development.”

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