NACS, NATSO (Representing America’s Travel Centers and Truckstops) and SIGMA: America’s Leading Fuel Marketers, sent a letter to the Ways and Means Committee last week asking it to advance biofuel tax policies that continue to result in lower fuel prices for consumers.
“Fuel retailers blend biofuels into the fuel supply for the same reason consumers purchase biofuels at the pump: it lowers the price of fuel. Today, light-duty drivers pay less money for E15 than they do E10 or straight gasoline, and truck drivers pay less for renewable diesel and biodiesel blends than they pay for straight diesel fuel,” the letter stated. “Biofuels extend fuel supplies and thus help keep transportation costs low. Higher gas prices are generally among the most visible impacts of inflation that consumers experience. When diesel costs go up, it tends to have an infectious inflationary impact on the broader economy because so many goods are moved by truck.”
The letter continued: “Passage of the Inflation Reduction Act (‘IRA’) significantly disrupted the biofuels tax incentive regime: Whereas today there are tax incentives for blenders of renewable advanced biofuels (biodiesel, renewable diesel and sustainable aviation fuel, or ‘SAF’), the IRA stipulates that starting in 2025 there will be a new producer incentive for all biofuels.”
In the letter, NACS, NATSO and SIGMA recommend these actions to the committee:
Near-Term:
• Extend the biodiesel blenders tax credit to prevent production plants from shutting down and higher diesel prices and emissions throughout the country. With the credit in place, Congress can consider long-term solutions without the threat of the biodiesel industry’s demise hanging over its head.
Medium-Term:
• Bifurcate the incentive scheme for fuels that are made from soybeans, used cooking oil, animal fats, and other advanced biofuel feedstocks, from the scheme that incentivizes fuels made from ethanol. Allowing subtle yet important structural differences that reflect each respective value chain to exist within each scheme will inevitably unlock sound market outcomes and political resolutions that are unavailable if all feedstocks and fuels are subject to the same regime.
Long-Term:
• Establish and extend separate tax schemes for (i) feedstocks that make diesel substitutes and (ii) feedstocks that make gasoline substitutes.
o The existing biodiesel blenders tax credit has been successful and should form the basis for any diesel substitute incentive.
o Similarly, the 45Z credit represents a reasonable starting place for discussions around a gasoline substitute incentive.
• Ensure that incentives are in place for a sufficient duration to provide market certainty and unlock the capital investments necessary to allow these industries