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Iowa, Illinois biodiesel experts say extension of tax credit would create more certainty for producers

Some industry experts say extending the biodiesel blenders’ tax credit for one year would create more certainty as the U.S. Treasury develops guidance for the new Clean Fuel Production tax credit, also known as 45Z.

Iowa Biodiesel Board executive director Grant Kimberley tells Brownfield…

“Right now, there really isn’t much activity happening beyond the end of this calendar year,” he says. “Most facilities do not have anything sold, they don’t have anything purchased on the input side for January and beyond into next year, because we don’t know really how the fuel can be priced. We don’t know what the rules of the of the new 45z Tax Credit Program are going to be.”

He says having the tax credit could buy time for producers if guidance isn’t put in place before the end of the year. Iowa is the nation’s leading biodiesel producer.

Andrew Larson, director of governmental relations and strategy with the Illinois Soybean Association, says soybean oil producers currently receive $1 for every gallon of B100 biodiesel produced but would only be eligible for up to 34 cents per gallon without the credit in place.

“There’s tight margins with B20 blends, which are what we are striving to use here in Illinois. Those are traditionally sold for within a few pennies of either below or above what traditional crude oil diesel sells for in the marketplace and having that tax credit really helps make sure we can remain cost competitive and provide a lower carbon feedstock into the fuel chain here in Illinois particularly,” he says.

Larson says Illinois uses over 300 million gallons of biodiesel annually.

Guidance on 45Z is expected by January 1. The current biodiesel tax credit expires at the end of this year.

A House Resolution to extend the credit was introduced by Ohio Congressman Mike Carey this summer. It currently has 15 cosponsors, including nine Republicans and six Democrats.

AUDIO: Grant Kimberley, Iowa Biodiesel Board

AUDIO: Andrew Larson, Illinois Soybean Association