10 June 2010 16:24 [Source: ICIS news]
HOUSTON (ICIS news)--The US Senate is confident it will pass legislation next week that includes the biodiesel blending tax credit that refiners say is crucial for keeping the industry afloat, sources said on Thursday.
Senate lawmakers added amendments to a jobs benefits bill that includes the $1/gal blending tax credit that they say would ensure its passage. The House passed a similar bill in late May.
If the bill passes the Senate, the new amendments would need to be approved by the House before going to the White House for President Barack Obama to sign.
Since the credit's expiration at the end of 2009, biodiesel producers have been wracked by shutdowns and layoffs as they struggled to compete without the subsidy against the price of conventional diesel.
“It sounds like a funeral home at midnight,” one producer said of the market without the credit.
Pure soy methyl ester (SME) was assessed at $3.06-3.15/gal on 3 June. With the application of the credit, that price would fall by $1/gal for blended material. That compares with the average US retail price of $2.94/gal for conventional diesel.
Biodiesel brokers have said that resolving the tax credit issue - even voting it down - would settle pricing ideas and boost sales in the struggling market.
The industry is currently running at 10% or less of capacity, according to government statistics.
Even with the credit, producers would face the challenge of ramping up production in anticipation of the scheduled start of US Environmental Protection Agency (EPA) renewable fuel standards this summer.
The mandate calls for 1.15bn gal/year (4.35bn litres/year) of biodiesel to enter the national fuel supply in 2010.
($1 = €0.83)
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