The U. S. Senate approved a bill March 10 that includes revival of the $1-a-gallon biodiesel tax credit for this year, which the renewable fuels industry has said is needed to increase output.
The overall bill, approved 62 to 36, is a $149-billion package of jobless aid and tax breaks Democrats hope will help spur job creation. The legislation now heads to the House of Representatives, where lawmakers could make changes of their own.
“The lapse in the biodiesel tax credit has been extremely disruptive to the domestic biodiesel industry,” said Manning Feraci of the National Biodiesel Board, an industry group.
“A retroactive extension of this worthwhile incentive will help America realize the job creation, energy security and environmental benefits associated with biodiesel,”
The $1-a-gallon biodiesel tax credit expired at the beginning of 2010. A similar ethanol tax credit of 45 cents a gallon and a tariff of 54 cents a gallon on ethanol imports are scheduled to expire at the end of this year.
One-third of the corn crop is used to make fuel ethanol and about 11 per cent of U. S. soybean oil is used for biodiesel.
The Amer i can Soybean Association has said production has virtually ceased since expiration of the credit.
The Food and Agricultural Policy Research Institute, a University of Missouri think-tank, said on Tuesday U. S. fuel ethanol and biodiesel production would be cut by 10 per cent if Congress allows biofuel tax credits to expire this year.
The institute also estimated corn and soybean prices would fall by 15 cents a bushel.