The US Senate on Friday passed a tax and spending package that
includes a retroactive extension through next year of a $1/gal
blenders tax credit for biodiesel and a $1.01/gal production tax
credit for cellulosic biofuels.
The credits had expired at the end of 2014.
The legislation now goes to President Barack Obama, who is expected
to sign it into law shortly.
The biodiesel industry has warned of layoffs and plant closures if
the tax incentives were not extended, while the cellulosic biofuels
industry has said its tax credits would help attract investment as
it scales up.
Notably, however, the package does not change the biodiesel
blenders credit to a producers credit, as the US biodiesel industry
had urged, arguing such a move would protect the US industry against
imports from Argentina, Asia and Europe.
The National Biodiesel Board has said the blenders credit would
continue to encourage imports at the expense of domestic production.
According to data compiled by Platts agricultural analytics unit
Kingsman, US biodiesel imports are forecast to reach 330 million
gallons this year, compared with 61 million gallons in 2012.
Domestic biodiesel production, meanwhile, is on pace to total 1.45
billion gallons, according to Kingsman.
Analysts with ClearView Energy Partners said in a note Thursday the
tax credit will lower the compliance cost of the Renewable Fuel
Standard biofuels mandate for refiners from 10 cents/gal of gasoline
or diesel to 6 cents/gal.
The RFS finalized in November by the Obama administration requires
1.90 billion gallons of biodiesel in 2016. Because of how the RFS is
structured, the ClearView analysts said they expect the cost of
biodiesel RINs to serve as a ceiling for ethanol RINs.
RINs are tradable credits that are generated for every gallon of
biofuel produced, which refiners must acquire to demonstrate
compliance with the RFS.
--Edited by Keiron Greenhalgh,
© 2015 Platts, The McGraw-Hill Companies Inc. All rights reserved.
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