What the Biodiesel Tax Credit Means for Truckstops

You’re probably aware that the biodiesel tax credit (BTC) is worth $1 per gallon and helps lower the cost of biodiesel. You may also know that it was recently reinstated — retroactively for 2018 and 2019, and also through 2022.

But how exactly does that benefit truck stops?

First, let’s summarize what the BTC has done up to this point:

• It was implemented in 2005 and has frequently been allowed to lapse. In fact, the latest renewal is the longest one since its inception.
• The $1 credit is available to anyone blending biodiesel into petroleum diesel, which means downstream businesses like truck stops may be eligible for the credit.

These two items are the key to how you can take advantage of biodiesel at your locations.

Lowering the Cost of Biofuel
First, the $1-per-gallon credit helps lower the price of biodiesel. Yes, it is a blender’s tax credit, but the savings are spread through the entire supply chain, from feedstock companies to the fuel producer to the truck stop to the end user.

So, by offering biodiesel blends, you should benefit from the lower price of biodiesel no matter whether you’re the blender or you’re buying blended fuel. If you’re not a qualified blender, I’d recommend talking to your fuel supplier about how the BTC affects what you pay.

The bottom line, though, is that the cost of your goods is lower, which can make you more competitive at the pump.

Also, even if you already offer biodiesel, you should evaluate whether going to higher biodiesel blends would benefit you. When there are positive blending economics, which the BTC contributes to, biodiesel is less expensive than diesel. So the higher your blend, the more you’ll save and the more competitive you can be on fuel prices.

Confidence in Capital Projects
The extension of the current BTC calms the rollercoaster ride the industry has experienced with the on-again, off-again nature of the policy. With a three-year guarantee that the BTC will be in place, truck stops interested in installing blending systems can have more confidence in their investment.

Taking this step includes installing a dedicated biodiesel storage tank and blending system. While there is obviously a cost to this, the project could have a relatively quick payback. Also, a number of states offer grants and loans to help retailers finance biodiesel infrastructure upgrades, so research those options.

If you have questions about how to make the most of the biodiesel tax credit at your truck stop, I’d be happy to discuss: steve.klein@regi.com.