US biodiesel tax credit may not pass until March - senator

08 January 2010 17:45  [Source: ICIS news]

HOUSTON (ICIS news)--A key US senator said lawmakers will not likely vote on a tax-extender bill crucial for the domestic biodiesel industry until February or March, according to transcripts made available on Friday.

Senator Chuck Grassley (Republican-Iowa), ranking Republican of the Senate finance committee, said although it has been “touch and go” for the US biodiesel industry since the $1/gal (€0.18/litre) blending credit expired on 31 December, the senate lawmakers will most likely not take up a vote to extend the credit until the latter half of the first quarter.

“It seems to me that there's a real intention of getting the extensions … done in the early months, and I mean maybe not January, but February and March,” Grassley told a scrum of farm reporters on Tuesday, according to a transcript released by his office.

The bill includes a one-year extension of the $1/gal blending credit biodiesel refiners need to make their renewable fuel competitive with traditional diesel. The House approved the extension in December, but the Senate let it lapse before lawmakers took their holiday break.

Sales of the renewable fuel have since halted, with production levels nearly reaching total stoppage, according to the National Biodiesel Board (NBB).

If the blending credit is not re-instated in the first half of the first financial quarter, the biodiesel industry will most likely experience a large wave of layoffs as producers run out of operating cash, said Daniel Oh, president of Iowa-based Renewable Energy Group (REG), the largest US biodiesel supplier.

“If we don’t see something by the first half of February, you’ll see some drastic moves,” Oh said.

A bill that Grassley and Senator Maria Cantwell (Democrat-Washington) introduced in 2009 that would extend the blending tax credit for five years has so far not been taken up by lawmakers.

($1 = €0.70)

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