US Senate approves $1/gal biodiesel tax credit

11 March 2010 10:19  [Source: ICIS news]

Senate approves tax creditLONDON (ICIS news)--The US Senate has approved a biodiesel tax credit that the industry hopes will get refineries back in production and bring some stability to the US renewable fuels market, sources said on Thursday.

The 62 votes to 36 votes approval of the American Workers, State, and Business Relief Act of 2010 re-instates the $1/gal biodiesel blending credit that expired on 31 December and extends it to the end of 2010. With the lapse of the credit, many biodiesel refineries were unable to compete with the price of traditional diesel, forcing them to halt production and in some cases lay off workers.

The bill now goes to be reconciled with a version the House passed in December and then to the White House for final approval, a process biodiesel refiners hope is a speedy one.

“The sooner it comes into affect, the sooner the industry starts to ramp back up. It begins to bring some stability,” said Ron Mar of Minnesota Soybean Processors, whose Brewster biodiesel plant has 30m gal/year in capacity.

The US biodiesel industry is currently running at an estimated 10% of capacity since the beginning of 2010, with fuel priced at about $3.30-3.40/gal for most of the first quarter, according to global chemical market intelligence service ICIS pricing. The average price for traditional diesel was $2.90/gal during the week of 8 March, according to the US Energy Information Administration (EIA).

If the blending credit legislation becomes law, and the US Environmental Protection Agency (EPA) implements the 1bn gal/year biodiesel mandate as planned, the US renewable fuel industry will start on the road to maturity, said National Biodiesel Board (NBB) spokesman Michael Frohlich.

"Once it happens, I think we’ll see a substantial improvement in the industry," Frohlich said. "It won’t be an overnight boom, but I get a sense that the industry has turned a corner."

($1 = €0.73)

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