PMAA, Others Applaud Legislation to Extend, Phase Out Biodiesel Blenders’ Tax Credit

Bipartisan legislation that would extend the biodiesel blenders’ tax credit and ultimately phase it out over five years “will enable PMAA’s members to charge customers less money for heating oil and motor fuel,” Rob Underwood, president of PMAA, said.

Representatives Diane Black (R-Tenn.) and Ron Kind (D-Wisc.) introduced the bill on July 18, and it was hailed the same day in a statement issued by NATSO, the national association representing truck stops and travel plazas, the Advanced Biofuels Association, National Association of Convenience Stores (NACS), Society of Independent Gasoline Marketers of America (SIGMA), and the American Trucking Associations (ATA), as well as PMAA.

“We applaud Representatives Black and Kind for introducing a measure that will enable consumers to have access to cleaner-burning fuel at the lowest possible cost,” said NATSO President and CEO Lisa Mullings.

The trade groups said they also support the proposal’s five-year phaseout. In the past, the federal biodiesel tax credit has been allowed to expire (as it did at the end of 2016), forcing market participants to wait for it to be retroactively renewed at the end of each year, the groups noted. Under the phaseout proposed by Representatives Black and Kind, the tax credit amount for all biodiesel blenders would be $1.00 per gallon in 2017 and 2018, $0.75 per gallon in 2019, $0.50 per gallon in 2020 and 2021, and zero in 2022 and later.

“The five-year phaseout contained in this legislation—which mirrors policy that has been enacted for other alternative energy sources such as wind and solar—is designed to provide much-needed policy certainty to the market. The phaseout is also compatible with congressional efforts to reform and simplify the tax code,” Mullings said.

“ATA applauds Representatives Black and Kind for introducing this legislation, which would result in lower fuel costs for truckers throughout the country,” said ATA Vice President Glen Kedzie.

“We support this bipartisan legislation introduced by Representatives Black and Kind that would extend and phase out the biodiesel blenders’ tax credit,” said Brad Puryear, general counsel of Mansfield Energy and chairman of SIGMA’s Legislative Committee. “The blenders’ credit encourages fuel marketers to expand usage of biodiesel, which contributes to American energy independence, promotes cleaner energy and supports the mission of the Renewable Fuel Standard. The blenders’ credit also results in a more competitive price of diesel fuel at the pump for all consumers. The phase out is fiscally prudent and provides business with clear direction and time to adapt to changes.”

Michael McAdams, president of the Advanced Biofuels Association, said ABA’s “membership is grateful and will work vigorously to support the bipartisan legislation introduced by Congresswoman Diane Black and Ron Kind today. This legislation is crucial to the continued success for all biodiesel sold and used in the United States. The continuation of the existing tax credit is the only way that money finds its way back to the pockets of those buying the fuel through lower cost.”

The legislation provides a viable off-ramp for the tax credit, ultimately facilitating free market economics to drive biodiesel supply and demand, the trade groups said.

Since 2005, the $1 per gallon biodiesel blenders’ tax credit has helped fuel retailers sell biodiesel at a price that is cost-competitive with diesel, thereby incentivizing consumer consumption, the groups said in their statement. This tax credit expired at the end of 2016.

Under the proposed measure, the tax credit will remain at the blender level, a decision NATSO strongly supports. “There has been a coordinated effort by a group of lawmakers representing states where biodiesel is produced and where its feedstock is grown to convert the biodiesel blenders’ tax credit to a producers’ credit,” the groups said in their statement. “This would increase prices for consumers and therefore constrict biodiesel consumption, ultimately impeding U.S. efforts to advance the utilization of cleaner burning fuels.”

“By keeping the biodiesel tax credit at the blender level, it will impose downward pressure on the retail price of fuel in all markets in the United States,” Mullings stated.