US Senate takes up biodiesel support measures in farm bill

11 June 2012 19:43  [Source: ICIS news]

WASHINGTON (ICIS)--The US Senate on Monday began consideration of a major agriculture bill that among other things would fund biodiesel production expansions, but those measures face an uncertain future in the House, an industry official said.

Ben Evans, spokesman for the National Biodiesel Board (NBB), said the Senate version of the farm bill – formally the “Agriculture Reform, Food and Jobs Act of 2012” – includes $20m (€16m) annually to sustain the Bioenergy Programme for Advanced Biofuels, which provides grants to biodiesel producers to increase plant capacities.

The 1,000-page Senate bill, S-3240, also includes $1m annually over the five years of the measure to continue the Biodiesel Fuel Education Programme, which aims at raising public awareness and acceptance of biodiesel.

The Senate floor debate of the farm bill is expected to take several days before a final vote is taken.

However, both of those Senate biodiesel support measures are uncertain in the US House, where a separate version of the farm bill is still pending before six subcommittees of the House Agriculture Committee.

The House is not in session this week, and final action in that chamber on the farm bill is at least weeks away.

Even more remote is congressional action on the biodiesel industry’s primary legislative goal, restoration of the $1/gal tax credit for biodiesel consumption.

That tax credit, which funnelled some $1bn in subsidies to the US biodiesel sector last year, expired at the end of December. 

The loss of that tax incentive, said Evans, is in part the cause of a fall-off in US biodiesel production so far this year.

Biodiesel output reached a record 1bn gallons in 2011, and in the last five months of the year averaged more than 100m gal/month with a peak of 160m gallons in December.

But since December, output has edged down to 135m gallons each in January and February, slipped to 101m gallons in March and fell to 95m gallons in April, according to the Environmental Protection Agency (EPA).

Restoring the $1/gal tax credit for biodiesel, said Evans, is not seen likely for several months at least.

The tax credit is not part of the farm bill and instead would be considered as part of a larger tax measure that Congress might consider before the end of this year.

With government spending, taxes and subsidies part of the political deadlock between the Republican controlled House and the Democrat majority Senate, action on a large number of tax issues is not seen as likely before the US national elections in November.

Depending on the outcome of the 6 November vote, Congress may take up the tax bills before the end of the year, or put off consideration of those measures until after the new Congress convenes in January.  Consequently, US biodiesel producers are not going to see renewal of the $1/gal tax credit for most if not all of 2012.

Those producers were on Capitol Hill last week, pressing members of Congress and the Obama administration for action.

The NBB wants the EPA to increase the Renewable Fuel Standard (RFS) mandate for biodiesel consumption to 1.28bn gallons for 2013 from this year’s 1bn gallon mandate.

But the Obama administration has delayed action on that mandate boost for nearly a year.

($1 = €0.80)

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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