Biodiesel backers hope Congress acts fast on tax credit

The head of the country’s largest biodiesel advocacy group says the industry is staggering in Nebraska and nationwide because of the loss of the federal biodiesel tax credit. Joe Jobe, CEO of the National Biodiesel Board, says the tax credit was one of the nation’s most successful energy policies and it needs to be reinstated, hopefully in the next few weeks, as Congress returns to work on Monday.
Jobe says, “We really need a policy framework that has that tax credit as the economic driver, the economic stimulator that’s not just creating demand for biodiesel, but it’s stimulating investment in plant science, investment in infrastructure, investment throughout the entire value chain.”
He says the dollar-a-gallon tax credit made soybean-based biodiesel competitive with petroleum-based diesel. The credit was allowed to expire at the end of 2009 after a five-year-run. Jobe says the result has been the widespread collapse of the biodiesel industry, both in Nebraska and across the country.
“A very significant portion of the biodiesel plants have either shuttered or they’re just barely keeping volumes going just to keep some of their systems running, some of their major customers supplied,” Jobe says. “It’s a substantially low amount of volume that’s being produced out there.”
Nebraska had two commercial biodiesel plants, Horizon Biofuels in Fremont and Northeast Nebraska Biofuel in Scribner. Both have shut down, but could be reopened if market conditions improve. Jobe says the oil industry has had federal support for decades, and the alternative fuels industry should have it, too, to compete.
Jobe says, “The fact that biofuels need some government policy support shouldn’t be surprising, especially when you have an emerging, small industry like the biodiesel industry that has to play in this very volatile market that’s a delta between two volatile markets, the energy market and the ag market.”
The tax credit was first put in place in January of 2005 and in the past five years, helped to launch 150 biodiesel plants nationwide, most of which are now sitting idle. Biodiesel production soared from 25-million gallons in 2004 to peaking last year at 545-million gallons. Congress is expected to extend the tax credit later this year, making it retroactive for the entire year.
The National Biodiesel Board is based in Jefferson City, Missouri.