The biodiesel industry, along with its congressional champions, trade association leaders and lobbyists, achieved a monumental milestone December 20th when President Trump signed into law a new budget deal that includes a historic five-year extension of the $1 per gallon biodiesel blenders tax credit.
On December 17th, the House approved two spending bills totaling $1.4 trillion, one of which passed in a 297-to-120 vote and included the five-year extension of the biodiesel tax credit. On December 19th, the measure passed the Senate 71 to 23.
The budget deal, signed into law just hours before the deadline to avoid a government shutdown, reinstates the important blenders tax credit for biodiesel and renewable diesel retroactively from its expiry on January 1st 2018, through December 31st, 2022.
Never in its 15-year history has the biodiesel tax credit been given such a long duration.
The incentive first went into effect in 2005 as a result of its inclusion in the American JOBS Creation Act of 2004 and, through a series of subsequent renewals, has never achieved extensions of more than two years forward, backward, or a combination thereof (as in 2015-’16). When first passed, the incentive provided a full dollar for biodiesel made from virgin oils or animal fats, and only half that for biodiesel made from recycled feedstocks such as used cooking oil. This was modified a few years after its passage.
The first installment of the tax credit was valid from 2005 through 2006. In August 2005, however, well before its first sunset date of December 31st, 2006, the Energy Policy Act of 2005 extended the biodiesel tax credit through 2008. EPAct 2005 also amended the incentive to allow renewable diesel to qualify. EPAct 2005 was also extremely important because it established the first Renewable Fuel Standard program in the United States.