Congress agrees to multiyear renewable tax extenders package

Biodiesel tax credit will help expand markets and support expansion of biodiesel and renewable diesel production.

Jacqui Fatka, Policy editor

December 17, 2019

3 Min Read
Congress agrees to multiyear renewable tax extenders package
United Soybean Board

Early Tuesday morning, congressional leaders announced a five-year extension of the biomass-based diesel tax credit as part of a year-end tax extenders package.

After midnight last night, an agreement was reached between Senate and House leadership following negotiations led by Sen. Chuck Grassley (R., Iowa) that would retroactively reinstate the second-generation biofuel producer credit, the special allowance for second-generation biofuel plant property and the alternative fuel refueling property credit for 2018 and 2019 and extend them through 2020. In addition, the biodiesel tax credit was reinstated for 2018 and 2019 and extended through 2022.

“We found a path to extend a small but significant set of policies by negotiating through midnight last night. This may not be the package I’d have pushed for on my own, but it’s a reasonable way forward that provides certainty where before there was only anxiety for many Americans,” Grassley said in a statement. 

If passed, the credit would be extended at $1/gal. for five years covering 2018-22, retroactive to Dec. 31, 2017, through Dec. 31, 2022.

The biodiesel tax incentive lapsed in December 2017, and the industry has faced nearly two years of uncertainty. The American Soybean Assn. (ASA) said it has worked closely with the National Biodiesel Board (NBB) to advocate for a multiyear extension of the biodiesel tax credit before the end of 2019.

Related:Report quantifies importance of biodiesel tax incentive

Kurt Kovarik, NBB vice president of federal affairs, said the deal provides the policy certainty that the biodiesel industry has been seeking to support investments and continued growth of production.

“Soy growers have faced several obstacles over the past two years: a down farm economy, a trade war, lapsed tax credits and biodiesel plants closing across the country,” said Rob Shaffer, ASA director and chair of the organization’s Biodiesel & Infrastructure Committee who also serves on NBB. “ASA is grateful to Congress for its support of the tax credit, which will help expand markets for soybean growers during an unsteady time.”

Renewable Fuels Assn. (RFA) president and chief executive officer Geoff Cooper stated, “While we continue to advocate for prospective, longer-term certainty for the second-generation biofuel producer credit and other relevant tax provisions, we are grateful this deal was reached to retroactively reinstate the lapsed second-generation biofuel provisions and extend them through 2020. We also appreciate the renewal and extension of the biodiesel and renewable diesel credit, as more than 2 billion lb. of corn distillers oil from ethanol plants are converted annually into the lowest-carbon source of biodiesel and renewable diesel available on the market today.”

Related:Ag groups ask Congress to extend biodiesel tax credit

Iowa Renewable Fuels Assn. (IRFA) executive director Monte Shaw added, “Passage of the biodiesel tax credit is much-needed good news in rural America. We thank Sen. Grassley for working into the wee hours of the morning to ensure this crucial policy finally moves forward. This credit has long been a priority for the senator, and as chairman of the Senate Finance Committee, he has shepherded it through to spark the growth of next-generation biofuels.

“For nearly two years, biodiesel producers have operated with great uncertainty. The absence of the tax credit harmed the financial viability of the biodiesel industry and threatened its future. Today’s bill provides a multi-year path forward for this young industry, boosting biodiesel production, securing jobs in rural communities and enhancing greenhouse gas reductions,” Shaw said.

While Grassley has fought for the past two years to reinstate the tax credit, part of the challenge to its passage was making the credit a priority for House leadership, IRFA said.

Shaw thanked Reps. Abby Finkenauer (D., Iowa) and Cindy Axne (D., Iowa) "for working diligently among their colleagues in the House to build support for the credit and impressing upon their leadership just how important the biodiesel credit is to rural America. Iowans remain united behind a growing role for biofuels, and today's news provides a boost for Iowa's economy heading into a new year.”

The package includes the extensions of the following policies:

  • Multiyear extension of the Biodiesel Tax Credit through (2022);

  • Multiyear extension of the Short-line Railroad Tax Credit (through 2022);

  • Extension of disaster tax relief;

  • Single-year extension of the Wind Energy Production Tax Credit;

  • Resolution of the tax-exempt organization parking tax, and

  • Clarification of the tax benefits for rural electric cooperatives (RURAL Act).

About the Author(s)

Jacqui Fatka

Policy editor, Farm Futures

Jacqui Fatka grew up on a diversified livestock and grain farm in southwest Iowa and graduated from Iowa State University with a bachelor’s degree in journalism and mass communications, with a minor in agriculture education, in 2003. She’s been writing for agricultural audiences ever since. In college, she interned with Wallaces Farmer and cultivated her love of ag policy during an internship with the Iowa Pork Producers Association, working in Sen. Chuck Grassley’s Capitol Hill press office. In 2003, she started full time for Farm Progress companies’ state and regional publications as the e-content editor, and became Farm Futures’ policy editor in 2004. A few years later, she began covering grain and biofuels markets for the weekly newspaper Feedstuffs. As the current policy editor for Farm Progress, she covers the ongoing developments in ag policy, trade, regulations and court rulings. Fatka also serves as the interim executive secretary-treasurer for the North American Agricultural Journalists. She lives on a small acreage in central Ohio with her husband and three children.

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