NEW YORK, Dec 17 (Reuters) – The biodiesel blender tax credit – a crucial incentive for biodiesel manufacturers – may be extended next year, but not before expiring at the end of 2013, a key lawmaker told reporters on Tuesday.
Iowa Senator Chuck Grassley said on a conference call that the Senate Finance Committee is expected to prepare a legislative package in 2014 extending some 50 expiring tax provisions, including the $1-a-gallon biodiesel blender tax credit.
“I would expect tax extenders will be passed next year,” Grassley said, adding that Finance Committee Chairman Max Baucus informally included an “extenders” bill on the committee agenda for 2014.
The package will likely be made retroactive, Grassley said, meaning that even if some of the provisions expire, beneficiaries such as biodiesel producers will still be able to claim the credits once they are reinstated.
Grassley’s remarks come a day after Massachusetts Senator Edward Markey and 23 other senators sent a letter to Finance Committee leaders asking them to renew 10 tax credits for energy, including the biodiesel measure.
Packaging the extenders together is a common way to get niche tax provisions passed through Congress.
Biodiesel manufacturers say the incentive is crucial to their business, as it makes the fuel more economic to produce relative to pure petroleum-based diesel.
Congress passed its latest “extenders” package on Jan. 1 as part of tax increases and budget cuts aimed at averting a so-called “fiscal cliff.”
The biodiesel credit, which lapsed at the end of 2011, was revived as part of that package for this year and applied retroactively to 2012 production. It is a key incentive for makers of the biofuel, who can claim a $1 credit to offset income taxes for each gallon of pure biodiesel that they blend with at least 0.1 percent petroleum diesel fuel.
Biodiesel is a type of diesel fuel made from soybean oil, recycled cooking oil and other renewable sources. The Agriculture Department estimates 26 percent of U.S. soybean oil will be used for biodiesel this marketing year, which begins Oct. 1.
The National Biodiesel Board, which represents producers, cheered Grassley’s remarks on Tuesday.
“We would certainly hope and expect that biodiesel would be included in such a package,” Anne Steckel, the group’s vice president of federal affairs, said in a statement.
However, she warned that letting the credit expire at the end of the year would add uncertainty to an industry already reeling from a proposed freeze in biodiesel consumption mandates sought by the U.S. Environmental Protection Agency.
“Assuming it expires in a few weeks as expected, it will mark the third time in five years that the incentive has lapsed,” she said. “That creates a tremendous amount of uncertainty in the industry that really limits its growth and development as a mainstream American fuel.”