Biodiesel Tax Incentive Extended to 2008

August 2, 2005

"Farmers in Arkansas and other rural states have already begun to turn to biodiesel, and I'm proud to have helped this promising biofuel gain a place at the table so it can be more cost-competitive with petroleum diesel."

- Senator Blanche Lincoln (D-AR)

Jefferson City, Missouri [RenewableEnergyAccess.com] The National Biodiesel Board (NBB) and American Soybean Association (ASA) hailed Congress's passage of the Energy Bill as a crucial step forward in establishing biodiesel as a long-term component of the nation's energy supply. The bill passed with several provisions to promote biodiesel's growth, including the extension of a federal excise tax credit, the industry's number one priority.

"The U.S. has not had a comprehensive energy strategy in decades and this bill finally changes that," said longtime biodiesel champion Senator Chuck Grassley (R-IA), who serves as Senate Finance Committee Chairman and was a member of the Energy Bill Conference Committee. "Its passage will help ensure the continued expansion of biodiesel and other renewable fuels that help strengthen national security by reducing our dependence on the Middle East for oil and expand markets for agricultural products."

The tax incentive, established originally as part of the American JOBS Creation Act of 2004, would have expired in 2006. It will now be extended through 2008. Senators Blanche Lincoln (D-AR) and Jim Talent (R-MO) were the chief sponsors of the extension.

The excise tax credit amounts to a penny per percentage point of biodiesel blended with petroleum diesel for "agri-biodiesel," such as that made from soybean oil, and a half-penny per percentage for biodiesel made from other sources. It is taken at the blender lever with the intended effect of lowering the cost of biodiesel to consumers in taxable and tax exempt markets.

"This bill brings us one step closer to a national energy policy that encourages the production and use of cleaner, renewable energy like biodiesel," Sen. Lincoln said. "Farmers in Arkansas and other rural states have already begun to turn to biodiesel, and I'm proud to have helped this promising biofuel gain a place at the table so it can be more cost-competitive with petroleum diesel. As I've said all along, in order to create favorable market conditions for biodiesel, we must have adequate support and tax incentives to foster these conditions.

Biodiesel can be used in any diesel engine in pure form, or blended with petroleum diesel. It significantly reduces most regulated emissions and is nontoxic and biodegradable. Biodiesel has the highest energy balance of any transportation fuel.

The U.S. Department of Energy (DOE) and the U.S. Department of Agriculture (USDA) in 1998 performed the prevailing life cycle study of the energy balance of biodiesel. It found that for every one unit of fossil energy used in the entire biodiesel production cycle, 3.2 unit of energy are gained when the fuel is burned, or a positive energy balance of 320 percent.

Please visit www.RenewableEnergyAccess.com for great coverage on energy today!!