NACS Applauds Introduction of Biodiesel Blenders’ Tax Credit Legislation

Bipartisan legislation would extend the biodiesel blenders’ tax credit and ultimately phase it out over five years.

July 19, 2017

ALEXANDRIA, Va. – NACS, along with NATSO, the Advanced Biofuels Association, Society of Independent Gasoline Marketers of America (SIGMA), Petroleum Marketers Association of America (PMAA) and the American Trucking Associations (ATA), applauded U.S. Reps. Diane Black (R-TN) and Ron Kind (D-WI) for introducing bipartisan legislation that would extend the biodiesel blenders’ tax credit and ultimately phase it out over five years.

“NACS supports H.R. 3264, and appreciates the leadership of Reps. Black and Kind in introducing this legislation,” said Paige Anderson, NACS director of government relations. “The biodiesel blenders’ tax credit has played an important role in bringing more biodiesel into the marketplace. However, the year-to-year extension process has led to increased uncertainty. This bill eliminates the uncertainty, keeps the tax credit with the blender, and provides a smooth transition in phasing out the tax credit. We urge members of Congress to support H.R. 3264 and hope it will be included in any tax bill that Congress considers.”

The trade groups also support the proposal’s five-year phaseout. In the past, the federal biodiesel tax credit has been allowed to expire (as it did at the end of 2016), forcing market participants to wait for it to be retroactively renewed at the end of each year. Under the phaseout proposed by Representatives Black and Kind, the tax credit amount for all biodiesel blenders would be $1 per gallon in 2017 and 2018, $0.75 per gallon in 2019, $0.50 per gallon in 2020 and 2021, and zero in 2022 and later.

The legislation provides a viable off-ramp for the tax credit, ultimately facilitating free market economics to drive biodiesel supply and demand. Since 2005, the $1 per gallon biodiesel blenders’ tax credit has helped fuel retailers sell biodiesel at a price that is cost-competitive with diesel, thereby incentivizing consumer consumption. This tax credit expired at the end of 2016.

Under the proposed measure, the tax credit will remain at the blender level, a decision strongly supported by the trade groups. There has been a coordinated effort by lawmakers representing states where biodiesel is produced and where its feedstock is grown to convert the biodiesel blenders’ tax credit to a producers’ credit. This would increase prices for consumers and therefore constrict biodiesel consumption, ultimately impeding U.S. efforts to advance the utilization of cleaner burning fuels.

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