More than a decade ago, Republicans and Democrats created a series of policies to build an advanced biofuel industry. Included among those policies, the Biodiesel Tax Incentive has been remarkably successful, helping the U.S biodiesel industry grow from a few hundred million gallons in 2005 to more than 2.6 billion today.
But the job is not finished; Congress has to renew the tax incentive to keep building the advanced biofuel industry. It is already nearly two years late, and it will take a bipartisan effort to get this done before the end of the year.
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Unfortunately, Congress has fallen into a bad habit of waiting until the last minute to renew expired and expiring tax credits like the biodiesel incentive. Congress has extended the credits at the last minute many times in the past — usually one year forward and one back.
Everyone understands that practice doesn’t provide the certainty in tax policy that businesses need. Instead, it forces them to gamble on Congress being able to finish its work every other year. Nevertheless, biodiesel producers have been forced to adjust to that pattern and price their product as though Congress will come through.
But now, Congress has allowed the tax credits to remain expired for nearly two years: one year under Republican control of the House of Representatives, and one under Democratic control. There is no need to assign blame for the delay, but there is a need for legislators to finally join together on a bipartisan basis and extend these tax credits before the end of the year.
The oil and gas industry has enjoyed uninterrupted tax incentives for nearly 100 years. But the renewable fuels industry has seen on-again, off-again tax incentives, which has made it unnecessarily difficult for farmers and producers who work together to produce biodiesel and other renewable fuels. It is long past the time for Congress to provide stability to biofuel producers.
Support for the biodiesel industry has always been bipartisan. The benefits of a domestic advanced biofuel industry meet many priorities for Republicans and Democrats alike. Biodiesel is cleaner-burning and lower in carbon, reducing both greenhouse gas emissions and particulate emissions that impact Americans’ health. Domestic production of biodiesel increases our nation’s energy security and benefits consumers. Because biodiesel displaces imports of oil, truck drivers and others can save about 17 cents on every gallon of fuel.
Congress’ support for biodiesel is also geographically diverse, with senators and representatives from Connecticut to Washington and many states in between championing the industry’s growth. The industry’s economic impact is significant and widespread, too. Biodiesel production, distribution and blending create jobs and generate economic activity across the country, supporting more than 65,000 jobs and generating $17 billion in economic activity every year.
The loss of a domestic advanced biofuel industry would be a loss for all Americans. That’s a frightening prospect and one that we’re very close to seeing come true.
Nine biodiesel plants across the country have publicly announced they’ve closed their doors or cut production. Many additional producers have slowed production and may be only a few weeks or months from shutting down.
Hundreds of workers are currently furloughed or completely out of work. Thousands of others are indirectly impacted through loss of demand for surplus oils and fats, reduced deliveries and blending of clean fuels, or reduced collection of greases and used cooking oil for recycling.
There is strong bipartisan agreement that Congress should extend the biodiesel tax incentive. About 65 representatives — with a balance of Democrats and Republicans — have co-sponsored legislation to renew it. Congress members should look at that agreement as a starting point for further agreement on tax priorities.
The stakes are high for everyone. So, we say to Congress, get this done! This shouldn’t be heavy lifting. It is the right thing to do.
We know there are many items on Congress’ agenda for the end of the year. And there are many partisan battles that can bring the process to a halt yet again. But Congress still must be capable of rising above it and finishing work that everyone agrees should be done.
Former Sen. Byron Dorgan is a senior policy adviser at Arent Fox and co-chair of the firm’s government relations practice. Former Sen. Kit Bond is chairman and partner of Kit Bond Strategies. Both are advisers to the biodiesel industry, though neither has a direct financial interest.
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