The National Association of Convenience Stores (NACS) marked the second association in as many days to publicly express that although it supports the biodiesel blender’s tax credit it would prefer no credit rather than have it converted to a producer’s credit.
Less than 24 hours after the Society of Independent Gasoline Marketers of America (SIGMA) wrote to the Senate Finance Committee that shifting the biodiesel tax credit to a producers’ credit would be “so damaging” that no credit at all would be a “better option,” NACS expressed the same sentiment in its own letter to the committee.
“The damage that would be inflicted upon the retail fuels industry by restructuring the credit as a producers’ credit would be sufficiently severe to make no credit a preferable option,” NACS wrote.
Like SIGMA, NACS urged the Senate Finance Committee to extend then responsibly phase out the biodiesel tax credit.
The Senate Finance Committee began marking up a tax code reform bill on Nov. 13 that included an amendment introduced by Senator Chuck Grassley (R-Iowa) aimed at extending and modifying the biodiesel tax credit.
Specifically, Sen. Grassley’s amendment seeks to extend the $1 per gallon biodiesel tax credit but transfer it upstream to a producers’ credit, a move strongly opposed by NATSO and other members of the fuel retailing community.
The fate of the biodiesel tax credit is now unlikely to be determined in tax reform legislation, however, as Senator Grassley told reporters Nov. 15, that the Senate will tackle a group of expired energy tax credits in an extenders bill at the end of the year.
NATSO and a diverse group of biodiesel producers, fuel retailers and trucking interests representing every segment of the biodiesel supply chain have long argued that Congress should extend and phase out the biodiesel blenders’ tax credit to ensure market certainty.
The groups sent a letter the Senate Finance Committee and House Ways and Means Committee on Oct. 31 in support of extending and phasing out the biodiesel blenders’ tax credit, and outlining their opposition to efforts to shift the credit to a producers’ credit as the tax-writing committees consider tax reform legislation.
From 2005 to 2016, the biodiesel blenders' tax credit successfully helped increase the domestic use of biofuels, reducing dependence on foreign oil, increasing U.S. energy independence and security, and achieving improvements in air quality. The credit ultimately lowered fuel prices for American consumers. However, the on again off again nature of the biodiesel tax credit, which expired in 2016, has created market uncertainty and left biodiesel blenders and retailers in the lurch as they wait to see if the credit will be extended.
Shifting to a producers' credit would essentially place a $1.00 per gallon tax on imported biodiesel, reducing blenders' affordable access to biodiesel and increasing the prices that blenders' must pay—which would be passed directly on to consumers.
A producers' credit also would incentivize the exporting of domestically-produced biodiesel, as producers would not be required to sell their product solely in the U.S. This would again reduce the amount of biofuel available to blend domestically and raise prices for consumers.
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