U.S. biodiesel lobby drops effort to adjust tax credit


Chicago | Reuters — The biggest U.S. biodiesel lobbying group has dropped its nine-year push to convert a US$1-per-gallon tax credit available to blenders of the biofuel into one for producers, the vice-president of federal affairs said on Friday.

The tax credit benefits companies that blend biodiesel into fuel sold at U.S. gas stations. It first went into effect as part the American Jobs Creation Act from 2005 to 2009 and has often been renewed retroactively in the years since.

The National Biodiesel Board previously sought to change the credit to benefit biodiesel producers it represents, saying the credit was intended to support the domestic industry. By contrast, some blenders who benefited from the credit were also importing millions of gallons of foreign biodiesel.

But import duties imposed by the U.S. Commerce Department have nearly stopped biodiesel imports from Indonesia and Argentina that were being sold below fair-market value, Kurt Kovarik, the board’s vice-president of federal affairs, told Congressional staff members this week in an email that was obtained by Reuters.

“The change recognizes the success of the trade case in preventing imports of illegally dumped and subsidized biodiesel,” he said.

The board also wants Congress to extend the blender’s tax credit over a long period of time, Kovarik said.

The National Biodiesel Board had pushed this year for the credit to be installed retroactively to 2017 and extended through 2018, but U.S. lawmakers as part of a budget deal in February only approved the credit for 2017.

Scott Irwin, agriculture economist at the University of Illinois, said the group is recognizing it will probably fail to convince Congress to adjust the credit to apply to biodiesel producers instead of blenders.

“The political environment for getting the tax credit extended is getting more difficult,” he said. “They are putting all their eggs on the extension of the credit rather than a conversion.”

Reporting for Reuters by Tom Polansek and Michael Hirtzer in Chicago; additional reporting by Jarrett Renshaw in New York.

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