The American Soybean Association (ASA) recently ramped up efforts for enactment of a federal tax package that includes a multi-year extension of the biodiesel tax credit, an issue its members say is vitally important for the nation and soybean stakeholders.
The United States is the world’s largest soybean producer, generating approximately 32 percent of the world’s soybeans. Soybean meal, specifically, remains a major product from soybeans that’s used for animal feed and human food. Soybean oil also is currently a major feedstock for the production of biodiesel.
“Biomass-based diesel is the only domestically produced advanced biofuel that is currently commercially available in the U.S., and it provides significant economic, energy security, environmental and health benefits,” Tom Hance, a staffer in ASA’s Washington, D.C. office, recently told Crop Protection News.
That’s why “the biodiesel tax credit is critical to the U.S. biodiesel industry’s competitiveness and growth,” which is also good for the soybean industry," he said.
The biodiesel tax credit expired in December 2014, and Congress this summer passed a two-year extension of the biodiesel tax credit retroactive for 2015, running through December 2016. The tax credit would remain a blender’s credit for 2015 and then shift to a producer’s credit for 2016.
That shift, Hance said, would restrict the ability of foreign-subsidized biodiesel to displace domestically produced biodiesel in the U.S. market, while also reducing the score for the cost of the biodiesel tax credit.
ASA, along with its partners at the National Biodiesel Board, supports such a restructuring of the biodiesel tax credit, and has asked members to support marker legislation introduced this month in the U.S. House and Senate to reinstate the biodiesel tax credit and reform it to a producer’s credit beginning in 2016.
The ASA wants Congress to reinstate the biodiesel tax credit, which is still pending, before Congress adjourns for the year.
“The biodiesel tax incentive has encouraged significant investment to expand the domestic biodiesel industry and help it become price competitive with petroleum diesel,” Hance told Crop Protection News.
At this stage, he said, biodiesel “requires the tax incentive to be cost competitive with the more mature and entrenched petroleum industry, and to be competitive with imported Brazilian sugarcane ethanol to fulfill the overall Advanced Biofuel volume requirements” of the Renewable Fuel Standard Program, which were finalized this year by the U.S. Environmental Protection Agency.
Biodiesel also has -- and will continue to -- create and sustain U.S. jobs, including many in rural America, Hance said.
With the industry’s economic impact also poised to grow due to continued production increases, it will support jobs in a variety of sectors, “from manufacturing to transportation, agriculture and service, providing numerous benefits for consumers and society as a whole,” he said.
Because soy oil has been displaced from food markets due to the move away from trans fat, Hance said biodiesel is an important market outlet for soy oil.
“Without it, surplus soy oil would be a drag on soybean prices," Hance said.
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