Biodiesel industry calling 'mayday' over federal tax incentive

Biodiesel industry calling 'mayday' over federal tax incentive
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May 1 — traditionally known as the springtime festival May Day — also is International Workers’ Day, a celebration of blue-collar workers. It’s an apropos time to draw attention to a “mayday” situation in the biodiesel industry that could threaten thousands of jobs here in Iowa and nationwide.

Biodiesel companies such as mine, Western Dubuque Biodiesel in Farley, Iowa, and plant workers nationwide face an uncertain future because of the long lapse of the federal biodiesel tax incentive. This energy policy served as a key driver for leveling the playing field with oil and encouraging American-made renewable energy. But Congress has allowed it to lapse for 16 months.

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Here’s the catch for producers: The market has always assumed the incentive would come back. Biodiesel producers have had little choice but to sell fuel at a price that includes the tax incentive already calculated in. The uncertainty of a tax credit is like having to go wager a company’s money at the roulette table, betting on black, but in the red. If Congress does not reinstate the incentive for 2018 and 2019, dozens of plants stand to lose millions of dollars.

This would deal an economic blow to the future of a vital manufacturing industry, putting good-paying jobs and production of a low-carbon, domestic fuel at risk. Since biodiesel is made from surplus fats or vegetable oils, usually a byproduct or coproduct of food production, this economic pressure also lurks over farmers, who are already hit hard by trade disputes and weather events.

Congress has the opportunity to help farmers, workers and biodiesel producers. If enacted swiftly, H.R. 2089 introduced by Rep. Abby FinkenauerAbby Lea FinkenauerIowa Democrat tops Ernst in third-quarter fundraising for Senate race Pelosi-backed group funding ads for vulnerable Democrats amid impeachment inquiry Lobbying world MORE (D-Iowa) would extend the tax credit for two years and provide these sectors some relief.

It’s important to know that with plants in nearly every state, the U.S. biodiesel and renewable diesel industry supports more than 60,000 jobs, paying more than $2.5 billion in annual wages and generating more than $11 billion in economic impact. The tax incentive has worked as intended, with the U.S. biodiesel market growing from about 100 million gallons in 2005, when it was first implemented, to more than 2.6 billion gallons annually since 2016. The tax incentive helped producers across the country continue to invest in capacity for future growth.

This tax incentive isn’t just good for Iowa; it’s good policy for America. It diversifies from where our energy comes and contributes to American jobs, the environment and energy security. Biodiesel production adds around 60 cents in value to every bushel of soybeans. Iowa is the nation’s leading biodiesel-producing state, making about 365 million gallons last year. An ABF economics study shows biodiesel supported 4,690 full-time equivalent jobs in Iowa last year.

Biodiesel has helped to revitalize many rural areas. In Farley, a town of 1,400 people, our workers are counting on the biodiesel tax incentive. Our wages and benefits total $1.6 million per year. This has made our area a far better place now and for the next generation. Reversing course would deal a devastating blow to all we’ve built. We urge Congress to act swiftly to protect jobs and economic opportunities across the United States.

Tom Brooks is general manager of Western Dubuque Biodiesel in Farley, Iowa, and chair of the Iowa Biodiesel Board. He also serves as a governing board member for the National Biodiesel Board. Follow on Twitter @IowaBiodiesel.