Sen. Tom Harkin (D-Iowa) and the National Biodiesel Board (NBB) separately have expressed support for an extension of the current biodiesel tax credit. Harkin asked the bipartisan leadership of the Senate Finance Committee to craft an extension of the credit as soon as possible. “An extension that isn't enacted until sometime in the spring of 2010, even if it is retroactive to Jan. 1, 2010, will be far less effective in supporting the continued production of biodiesel by many of these plants because of their urgent need for continuity of this tax credit,” Harkin said in a letter to Chairman Max Baucus (D-Mont.) and the committee's ranking member Sen. Charles Grassley (R-Iowa). 

Meanwhile, NBB, the industry's trade association, released a study dated Dec. 3 that underscored the adverse consequences of a lapsed credit. According to the study, without the tax credit, the price of biodiesel would be insufficient to provide a positive return over variable costs and the biodiesel industry could be expected to collapse. The NBB study concludes that this would have several notable adverse economic impacts including:

• A loss of jobs and income;
• Increased demand for petroleum diesel and a degradation of energy security;
• Lower demand for soybean oil and soybeans for crushing leading to lower soybean prices and a negative impact on farm income;
• Stranded investment as biodiesel capacity is idled; and
• Lost tax revenue for states and local governments.
  
  

“Biodiesel production is consistent with an energy policy that values the creation of green jobs and the displacement of petroleum with domestically produced, low carbon fuel,” Manning Feraci, NBB's vice president of federal affairs, said in a news release. “Action by Congress to extend the incentive before the end of the year is absolutely necessary if we as a nation are to continue realizing the benefits of domestic biodiesel production.” 

NBB previously had supported companion legislation (HR 4070, S 1589) that would have provided a five-year extension of a restructured biodiesel tax credit. The credit would have shifted from a “blender” credit given for blending biodiesel with petroleum diesel fuel to a production credit. NBB also said it will continue to push for a multi-year extension of a production-based biodiesel tax credit in the future. 

The House on Dec. 9 approved the Tax Extenders Act of 2009 (HR 4213), including a one-year extension, through Dec. 31, 2010, of the biodiesel tax incentive. An aide to Sen. Baucus said the chairman is focused on finishing the extenders bill this year after the Senate ends work on the health care overhaul. While some say Congress could delay resolution of the extenders issue, given that most of the provisions can be extended retroactively, any delay certainly would negatively impact biodiesel facilities and investments.