Cantwell, Grassley Lead Group of 16 Senators to Bolster Low-Carbon Biofuels with Biodiesel Tax Credit

Bill would improve biodiesel program to benefit American producers, advance energy independence

WASHINGTON, D.C. – Today, U.S. Senator Maria Cantwell (D-WA), ranking member on the Senate Energy and Natural Resources Committee, Sen. Chuck Grassley (R-IA), and 16 other senators introduced bipartisan legislation to reform the biodiesel tax credit and extend the new policy for three years.

The Senators’ bill, the American Renewable Fuel and Job Creation Act, extends this important clean-fuel incentive for three years and reforms existing law by transferring the credit from the blenders to the producers of biofuels. The switch ensures that the tax credit incentivizes domestic production and taxpayers aren’t subsidizing imported fuel.

Biofuel imports from Argentina, Indonesia, Singapore, the European Union, South Korea and others are projected to exceed 1.8 billion gallons over 2016 and 2017.  In many cases, foreign biodiesel benefits both from the existing tax credit and from additional foreign subsidies, which makes it difficult for biodiesel facilities in Washington state to compete. In 2015 alone, the U.S. Treasury spent more than $600 million on tax credits for imported biodiesel and renewable diesel. Cantwell and Grassley’s bill will help Washington state’s industry grow to its full potential. The state currently has capacity to produce some 100 million gallons of biofuel annually.

“The biodiesel tax credit already has a sterling track record of reducing emissions and greening our economy, removing the equivalent of 16 million cars from the road,” said Senator Cantwell. “This legislation will remove millions more cars while promoting energy independence, saving taxpayer dollars, and accelerating by up to 45 percent the creation of clean energy jobs in the domestic biodiesel production industry.”

“U.S. tax policy should support U.S. products and U.S. jobs,” Grassley said. “This bipartisan bill would end a system that gives many foreign producers a leg up over U.S. producers and give certainty to the biodiesel industry, which is responsible for employing thousands of Americans. U.S. producers shouldn’t be put at a disadvantage by foreign producers that in many cases are double dipping by benefiting from U.S. tax incentives on top of their own significant government subsidies. These reforms supporting domestic producers would also save U.S. taxpayers money. Policies ought to encourage the production of domestic renewable fuels to meet consumer demand and support the creation of American jobs.”

Joining Grassley and Cantwell to co-sponsor the American Renewable Fuel and Job Creation Act are Sens. Pat Roberts (R-KS), Mazie Hirono (D-HI), Roy Blunt (R-MO), Sheldon Whitehouse (D-RI), Joni Ernst (R-IA), Heidi Heitkamp (D-ND), John Thune (R-SD), Tom Udall (D-NM), Martin Heinrich (D-NM), Jeanne Shaheen (D-NH), Amy Klobuchar (D-MN), Al Franken (D-MN), Joe Donnelly (D-IN) and Patty Murray (D-WA).

Cantwell has long supported the development and commercialization of biofuel to help reduce our nation’s dependence on petroleum-based fuels and better protect the environment. She joined with Grassley to introduce similar legislation promoting biodiesel in the 114th Congress. In 2007, Cantwell helped author the Renewable Fuels Standard, which, along with increasing vehicle fuel economy standards, has helped reduce our nation’s dangerous overdependence on oil.

The bill would allow the nation to continue enjoying the significant benefits of biodiesel since Congress created the biodiesel tax incentive in 2005.  As a result of this incentive, the Renewable Fuel Standard, and consumer interest, biodiesel is providing significant benefits to the nation. Domestic biodiesel production supports tens of thousands of jobs. Replacing traditional diesel with biodiesel reduces emissions and creates cleaner air.  Homegrown biodiesel improves U.S. energy security by diversifying transportation fuels and reducing dependence on foreign oil.  Biodiesel itself is a diverse fuel that can be produced from a wide array of resources such as recycled cooking oil, soybean and other plant oils, and animal fats. 

Switching from a blenders credit to producers credit would offer numerous additional benefits. The blenders credit can be difficult to administer, because the blending of the fuel can occur at many different stages of the fuel distribution.  This can make it difficult to ensure that only fuel that qualifies for the credit claims the incentive.

Modifying the credit is estimated to have little to no impact on consumer prices.  Much of the credit would continue to be passed on to the blender and ultimately, the consumer.  Additionally, the U.S. biodiesel industry is currently operating at approximately 55 percent of capacity.  The domestic biodiesel industry has the capacity and access to affordable feedstocks to meet the demand of U.S. consumers.