US biodiesel failure could cost nation millions - study

08 December 2009 20:45  [Source: ICIS news]

HOUSTON (ICIS news)--Failure to extend a federal tax credit to US biodiesel producers could cost the country 23,000 jobs and $828m (€555m) in tax revenue, the National Biodiesel Board (NBB) said on Tuesday.

The trade association commissioned the report from commodity analysis firm LECG.

LECG director John Urbanchuk said the loss of the $1/gal blending credit, set to expire on 31 December, would result in an average cost-of-production loss of 68 cents/gal.

Right now, producing biodiesel is just not profitable,” Urbanchuk said in a telephone interview. “And if you can’t take away that credit, producers are not going to meet variable costs.”  

The biodiesel industry has already lost 29,000 jobs due to the recent recession and EU tariffs preventing sales to what had been the main market for US refiners, according to the report.

The US biodiesel industry manufactured 409m gal (1.55bn litres) of the renewable fuel in the first 10 months of 2009, down 30% from the same period the year before, according to Census Bureau statistics. The industry is running at about 15% of overall capacity, the LECG report states.

Bills in the US House and Senate that would extend the tax credit for five years are not expected to come to a vote this year, sources said.

A tax-extender bill that would maintain the credit until the end of 2010 is expected to see a vote in the House on Thursday, but might not get through the Senate this month, NBB spokesman Michael Frohlich said.

($1 = €0.67)

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