Biodiesel Blender Tax Credit Expiration Looms
The Biodiesel Blender Tax Credit is set to expire at the end of 2024, at which point it will be replaced by the Clean Fuel Production Credit. The Clean Fuel Production credit (somewhat obviously) accrues credit to producers of clean transportation fuels produced at approved facilities for approved uses and does NOT carry through to blenders of clean transportation fuels like biodiesel and renewable diesel.
The current Biodiesel Blenders Tax Credit applies a credit of $1/gal for biodiesel and renewable diesel blends, as well as making available an additional $.10 for small Agri-biodiesel producers to collect.
The BTC was created to incentivize and stimulate investment in green fuels 20 years ago and was a substantial growth mechanism for what is now a more than $17 billion dollar industry. For context, in 2004, the Red Sox won the World Series and our Biodiesel retail station in Chelsea MA, which was the first in the state, was only 2 years old. Now biodiesel is a standard product blended in diesel across the region by default. That is wildly impressive growth, and the Biodiesel Blender Tax Credit played no small part in it.
HR 9060 has been introduced in the US House of Representatives to extend the Blender Tax Credit. Extension, it is argued, would benefit not just blenders themselves but also have positive effects throughout the supply and production chains for biobased fuels – from farmers out through distributors.
In a time when the political focus is extremely dialed in on decarbonization, it would seem reasonable to continue to incentivize the growth and use of the “OG” low carbon intensive alternative fuel, particularly in light of its already existent infrastructure and distribution networks, which stand in stark contrast to the infrastructure landscape of other alternatives, like electric vehicles.
Here in the Northeast, terminal options across the member states (as well as adjoining states in the tristate area) already feature blended levels of biodiesel up to 5% and the positive downstream emissions benefits of that volume are substantial. To risk reversal of those gains in traction at a time where carbon emission reduction is of paramount importance and concern seems shortsighted at best.