The U.S. Senate this week passed a bill containing the reinstatement of the biodiesel blenders' tax credit, a critical piece of policy for the industry that had been allowed to expire at the end of 2009. The American Workers, State and Business Relief Act, included H.R. 4213, the Extenders Package which contains the extension of the US $1 per gallon biodiesel production tax credit. The bill calls for the tax credit to be retroactive to January 1 and runs out on December 31, 2010.

This passage follows a tumultuous few months for the biodiesel industry that have seen production drop off and new investments grind to a halt.

On February 11, 2010, Senator Max Baucus (D-MT) and Senator Charles Grassley (R-IA) unveiled the Hiring Employees to Restore Employment (HIRE) Act, legislation that among other things provided for the extension of the biodiesel tax incentive.

In the weeks that followed, Senate Majority Leader Harry Reid (D-NV) announced his decision to move forward with a scaled-down jobs package that did not include an extension of the biodiesel tax incentive, indicating that this issue and other expiring provisions would be addressed at some undetermined point in the future.

Biodiesel companies are now praising the Senate for taking action on the measure.

“Senate passage of the bill with the inclusion of the biodiesel tax credit confirms the availability of the tax incentive for the biodiesel industry in 2010,” said Gary Haer, Renewable Energy Group’s vice president of Sales and Marketing. “However, it is important for our partners in the petroleum industry to note that U.S. Senate approval of this legislation does not mark the end of the legislative process for this tax credit.”

The House passed a similar bill earlier this year and now both bills will need to be reconciled in conference. Timing for final passage and presidential signature remains uncertain.

According to the National Biodiesel Board, further delay addressing the tax credit is certain to make the job loss situation worse and imperil the 23,000 green jobs the industry currently supports.

“We urge our Congressmen to move quickly to include the biodiesel tax credit in the first moving piece of legislation possible and get it to the President’s desk,” Haer said. “Since the Jan. 1 lapse of the tax credit, our industry has seen significant reductions in biodiesel demand leading to manufacturing slow down and widespread job loss, including staff at REG network plants in Iowa.”

The House passed a similar bill earlier this year and now both bills will need to be reconciled in conference. Timing for final passage and presidential signature remains uncertain.