By Samuel Diamond
The National Biodiesel Board (NBB) has officially ceased its nearly-decade-old effort to convert the $1-per-gallon Biodiesel Tax Credit (BTC) from a blender credit to a producer credit.
Reuters broke the news on May 25, 2018, though Oil & Energy and others in the New England Fuel Institute (NEFI) were first made aware of the policy shift during a teleconference that took place prior to the Petroleum Marketers Association of America’s “Day on the Hill” event in Washington, DC, May 17. (In response, one participant in that call uttered the phrase that gave this article its title.)
As previously reported by Oil & Energy, the BTC has expired and been temporarily reinstated numerous times over the past decade. This occurred most recently in early 2018, when the credit was reinstated retroactively for fiscal year 2017, with an expiration date of December 31, 2017. This effectively made the credit available for only one year, providing no added assurance to the blenders for whom the BTC has major fiscal implications. NEFI and NBB have both lobbied Congress for a multi-year extension of the BTC credit, and it was one of several key policy issues raised by NEFI members at this year’s “Day on the Hill.”
NBB has hinted that its policy shift was tied to the stoppage of biodiesel imports that occurred after the U.S. Commerce Department decided to impose tariffs on biodiesel shipped to the U.S. from Indonesia and Argentina. “The change recognizes the success of the trade case in preventing imports of illegally dumped and subsidized biodiesel,” said NBB Vice President of Federal Affairs Kurt Kovarik.
Perhaps foretelling the change in policy, Kovarik’s statement back in February on the BTC’s one-year renewal omitted any mention of the blender-producer issue. “The industry is grateful to our champions for their tireless efforts to ensure that all of our members’ transactions in 2017 will be properly covered by a retroactive extension of the blenders credit,” he said at the time. “Candidly, we are disappointed that some of the negotiators prevented the extension from covering 2018, as well. We will continue to make the case that a long-term extension of biodiesel and renewable diesel tax incentives is good energy policy, good tax policy, and would produce more of the environmental and economic benefits that were envisioned when Congress designed the incentives.”
NEFI President & CEO Sean Cota echoed the latter sentiment in a March 28 letter to Congress, writing: “Biodiesel-blended heating oil provides measurable benefits for businesses, consumers, the environment, and local economies. Along with other federal and state incentives, the BTC has played an important role in helping to ensure biodiesel supplies necessary to meet growing demand in the heating oil market. It has also led to billions of dollars of investments in related production, storage, blending and distribution infrastructure. The BTC can not only continue to serve this purpose, but a multi-year extension can provide much-needed market certainty for heating oil marketers, biodiesel producers and other industry stakeholders.”