20 May 2010 16:35 [Source: ICIS news]
HOUSTON (ICIS news)--Joint legislation scheduled to be introduced in the US House and Senate on Thursday would renew the $1/gal biodiesel blending tax credit that expired last year, sources said.
Reinstatement of the credit, the expiration of which at the end of 2009 contributed to a collapse in the US biodiesel industry, was crucial to refiners who for most of the year had struggled to compete with traditional diesel on pricing.
US Rep. Sander Levin (Democrat-Michigan) and Sen. Max Baucus (Democrat-Montana) included the credit in their jointly sponsored American Jobs and Closing Tax Loopholes Act, which would also extend benefits to the unemployed.
If the House and Senate pass the bills, the package would go to the White House for signing. Aides speaking for Levin and Baucus said they were optimistic lawmakers would vote on the bills on Friday. The industry is hoping to see the credits reinstated before the Memorial Day holiday at the end of May.
After the credit expired on 31 December 2009, biodiesel sales plummeted and refining rates plunged to less than 10% of the industry’s 1.3bn gal/year capacity, according to government statistics.
Biodiesel refiners such as Renewable Energy Group (REG) in Ames, Iowa, cut 50 staff members and lowered production to 25% of its network capacity since January, said company spokeswoman Alicia Clancey.
“Getting the credit passed before Memorial Day is absolutely what the biodiesel industry needs. Financial institutions are hesitant to offer debt financing and working capital because of the lack of the credit,” she said.
US B100 soy methyl ester (SME) biodiesel was assessed at $3.00-3.10/gal on 13 May, compared with $3.09/gal for traditional diesel.
($1 = €0.81)
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