Consultant study: Biodiesel Tax Credit ‘essential’ to industry
A study released today by FTI Consulting found that the Biodiesel Tax Credit “is essential to the industry’s growth and prosperity.”
House Ways and Means Committee Chairman Kevin Brady, R-Texas, has said that the tax package he is preparing will contain a renewal of the BTC. Sen. Charles Grassley, R-Iowa, has said he will make inclusion of the BTC a priority as the tax bill moves through Congress in the last days of the session.
“Across the production and financial data analyzed, analysts found that — with the BTC in place in 2017 — the biodiesel industry supported $21.6 billion in economy-wide sales, employment for over 60,000 workers with wages and benefits totaling $3.8 billion, and nearly $2 billion in state and federal tax revenues combined,” FTI said in a news release.
“As biodiesel is essentially interchangeable with conventional diesel, but with lower greenhouse gas (GHG) emissions, the analysis also revealed significant contributions to U.S. energy security and GHG emissions reductions equivalent to taking 3.2 million cars off U.S. roads,” the study said.
The study noted that since 2001, biodiesel production has multiplied more than 100-fold, growing from just over 9 million gallons to 1.6 billion gallons in 2017.
As a basis for the analysis, FTI constructed a profile of the U.S. biodiesel industry in 2017, consisting of 124 facilities with a total capacity of 2.5 billion gallons spread across the 38 states where production occurs. FTI quantified the impact of the industry and considered how its growth can help secure American energy independence and decrease reliance on foreign oil.
FTI’s analysis concluded that if the BTC had been discontinued in 2017, biodiesel producers would have suffered an average loss of 25 cents per gallon produced and, if not extended in 2018, the industry would no longer be able to sustain its prior progress.
The study noted that the Biodiesel Tax Credit was established in 2005 as part of the American Jobs Creation Act and was designed to give qualified biodiesel producers or blenders an income tax credit of $1.00 per gallon of pure biodiesel or renewable diesel produced or used in the blending process.
The BTC is generally shared between the producers of feedstock, which includes farms and biodiesel blenders. Since the original legislation only provided the BTC through 2009, the availability of the BTC since then has been subject to congressional extension and/or retroactive renewal each year, which has created uncertainty in the industry.
The National Biodiesel Board recently welcomed Brady’s proposal for a multi-year extension, noting it would keep the credit at its current rate of $1 per gallon for 2018 through 2021 but gradually reduce it to 33 cents per gallon by 2024 and then allow it to expire.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User