Time Running Out for Biodiesel Credit

Time Running Out for Biodiesel Credit

As the year ends, Congress hasn't moved on the tax credit - which could hurt the alternative fuel's development.

A fledgling industry with loads of promise sometimes needs a little help, but on Thursday that help is going away for the biodiesel industry. The biodiesel tax subsidy expires at the end of 2009 and Congress has yet to renew it for 2010 despite plenty of lobbying and support from a range of farm groups.

Some analysts worry that without the tax credit the industry, which produces a fuel cleaner than petro-based diesel that produces lower greenhouse gases, could grind to a halt. Sen. Chuck Grassley, R-Iowa, has been pushing to renew the $1 per gallon subsidy paid to refineries that blend the renewable fuel into their products, but blame the health care debate for taking lawmakers' eyes off the ball.

In a recent report by Minnesota Public Radio, notes that the industry is already limping along because of low profit margins with plants operating at just 15% of capacity. Grassley predicts the subsidy loss will force remaining operations to close, which could cost as much as 23,000 jobs.

Minnesota gets some attention on the issue since the state has a biodiesel mandate requiring the use of 2% biodiesel in all diesel fuel sold in the state. That's going to keep some plants going just to meet that legislated demand.

Grassley has said that work on renewing the credit will begin in earnest when Congress returns from the holiday break.

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