Biodiesel Tax Incentive Introduced in Congress

Rounding out a historic week for the biodiesel industry, on the heels of President Bush’s visit to a Virginia biodiesel plant Monday, biodiesel champions in the U.S. Senate and House introduced bills to extend a federal tax incentive that has helped boost demand for the alternative fuel.

Senators Blanche Lincoln (D-AR) and Jim Talent (R-MO) are the chief sponsors of the Senate stand-alone bill, which would extend the biodiesel federal excise tax credit to 2010. The existing incentive is scheduled to expire at the end of 2006. The introduction of this legislation will pave the way for its inclusion in the Senate Finance Committee’s energy tax package, which will be written by longtime biodiesel champion Chairman Chuck Grassley (R-IA). Extending the tax credit is the biodiesel industry’s number one priority in order to maximize its benefits to the U.S. and to boost investor confidence that the government will make a long-term commitment to seeing biodiesel succeed. The credit was established as part of the American JOBS Creation Act of 2004 (H.R. 4520), and President Bush signed the bill into law in October 2004. Reps. Kenny Hulshof (R-MO) and Earl Pomeroy (D-ND) lead the charge on the House side, also introducing an extension bill this week. Both championed the passage of the initial tax incentive. Cosponsors include Congressmen Jim Nussle (R-IA) and Ron Lewis (R-KY). The excise tax credit amounts to a penny per percentage point of biodiesel blended with petroleum diesel for “agri-biodiesel,” such as that made from soybean oil, and a half-penny per percentage for biodiesel made from other sources, like recycled cooking oil. It will lower the cost of biodiesel to consumers in taxable and tax exempt markets. President Bush, while visiting Virginia Biodiesel in New Kent, Virginia, urged Congress on Monday to pass comprehensive energy legislation by this summer. During the visit, which marked the first time a U.S. President has visited a biodiesel plant, Mr. Bush said “the final step toward making America less dependent on foreign oil is to develop new alternatives to gasoline and diesel.”
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