Biodiesel Tax Credit Welcomed, But Uncertainty Lingers

Associations Rally Around Bioheat

In the early morning hours of Friday, February 9, Congress approved a $320 billion, two-year budget deal that funds the government through March 23.

The bill included short-term extensions to certain business and individual tax provisions, or “tax extenders” that had been left out of the Tax Cuts & Jobs Act. Among these was a one-year retroactive extension of the $1 per gallon biodiesel blenders’ tax credit. The New England Fuel Institute (NEFI) has been a fierce advocate for the credit, which supports biodiesel production in the Northeast and the continued growth of biodiesel-blended heating oil (commonly referred to as Bioheat® Fuel) throughout the industry.

Although industry stakeholders welcomed the news that the blenders’ credit, which last lapsed January 1, 2017, had been retroactively renewed, some lamented that the credit was not extended into the future or made permanent. As things stands right now, blenders can claim credits on their 2018 filings (for fiscal year 2017) but won’t be able to do so on their 2019 filings (for FY2018) unless additional legislation is enacted.

Sources stress that uncertainty surrounding the tax credit’s future has been a continued cause of frustration.

Noting that the biodiesel blenders’ credit has now lapsed and been reinstated five separate times, HERO BX Vice President of Sales Tim Keaveney says, “These credit lapses affect every facet of the industry, from purchasing to producing biodiesel to selling it downstream.” HERO BX is a biodiesel producer, blender, and supplier, with manufacturing facilities in Erie, Pennsylvania and Moundville, Alabama, as well as a blending terminal and Branded Bioheat® Program in North Hampton, New Hampshire. “It’s a dance among all the players to figure out how to source, make and sell a gallon,” Keaveney says. “Despite these challenges, we’ve managed to continue helping our customers find new and sustainable ways to fuel their future. That’s something of which HERO BX Founder Samuel P. “Pat” Black III and I are both extremely proud.”

While there’s no clear indication whether or not the biodiesel credit will be reinstated for FY2018, Michael Devine, Northeast Sales and Marketing Representative of biodiesel and Bioheat fuel wholesaler AMERIgreen Energy, sees at least some promise in the latest renewal. “I hope that we’re moving into a less chaotic period,” he says, observing that questions about the Renewable Fuel Standard and antidumping/countervailing duties made 2017 an especially uncertain year for the industry. “We’re now likely to see a biodiesel market that is based on the fundamentals of RINs pricing, BOHO spreads and supply and demand factors as opposed to dramatic policy disruption, which in turn should create fewer uncertainties in the market for biodiesel blending. Consistent policy creates a more supportive environment for Oilheat distributors to carry forth a winning message to their customers in a cost-effective manner.”

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