Biodiesel Tax Credit Extension

Biodiesel Tax Credit Extension. The US has passed a Biodiesel tax credit extension for the production of renewable energy, including biodiesel. The new legislation simplifies the tax credit for producers and the law would be extended for five years. Nationally, the biodiesel tax incentive has helped increase the production and use of biodiesel from 25 million gallons in 2004 to 500 million gallons in 2007. If the biodiesel tax incentive was to lapse, biodiesel production in California would halt and the development of new production and distribution facilities would be shortened or lost.

If the biodiesel tax credit is not extended, small businesses in California that comprise the State’s biodiesel industry will be placed in an unequal and unfair position relative to our fellow citizens to the North and East who can produce biofuels from more water-intensive crops such as corn and soybeans. The biodiesel blenders excise tax is structured in a manner that helps make biodiesel price competitive with conventional diesel fuel. If the tax incentive is allowed to expire at the end of the year, the price of biodiesel will be significantly higher than petroleum diesel, thus significantly reducing demand and making it nearly impossible for biodiesel plants to produce fuel at a profit.