Biodiesel

Long-term extension of biodiesel tax credit and favorable implementation of RFS
Soy Action Center

ASA plans to continue efforts to enact a long-term extension of the biodiesel tax credit. On the RFS, we will continue to support appropriate growth in annual volumes for biomass-based diesel and Advanced Biofuels categories as well as oppose efforts to undermine the RFS through arbitrary waivers. 

 

Photo Courtesy of USB

Biodiesel Positions

  • ASA supports U.S. production of biodiesel fuel using domestic feed stocks.
  • ASA supports policies that encourage all diesel fuel and diesel-powered vehicles to use biodiesel or a biodiesel blend.
    ASA supports a long-term extension of the biodiesel blender’s tax credit
  • ASA supports biodiesel as a domestically-produced, commercially-available, biomass-based diesel fuel that meets EPA’s definition of an advanced biofuel to meet RFS2 obligation.
  • ASA supports the Renewable Fuel Standard (RFS2) that reflects the expansion of the renewable fuels industry for biodiesel and ethanol and opposes any changes that would reduce obligations or otherwise negatively impact the biodiesel industry.
  • ASA believes EPA should place a higher priority on policies that promote and support domestic biodiesel production, including the establishment of annual volume requirements that accommodate increasing volumes of domestic biodiesel production.

Issues Background

The EPA’s 2018 RFS volume requirements set biomass-based diesel at 2.43 billion gallons for 2020 and total Advanced Biofuels at 4.92 for 2019. This represents modest growth from previous year requirements.

Biodiesel provides multiple energy, economic, and environmental benefits:

  • It provides increasing volumes of a domestically-produced, renewable energy source.
  • It provides significant reductions in greenhouse gas emissions resulting in improved air quality.
  • It has expanded markets for farmers and livestock producers and created new jobs and economic growth, particularly in rural America.
  • Biodiesel achieves this without adverse impacts on food and feed production. Biodiesel actually has a positive impact on soybean meal supplies. Processing biodiesel from soybeans uses only the oil, which comprises 20% of the soybean, and leaves the other 80% available as protein-rich soy meal for use as animal feed, thus creating a surplus and bringing down the cost of feed.
  • Global demand for soy meal protein has resulted in increased soybean production, and at the same time, soy oil has been displaced from food markets due to the shift away from trans-fat. Biodiesel is an important market outlet for soy oil. Without it, surplus soy oil would be a drag on soybean prices. Increasing the RFS volume requirements for biomass-based diesel helps farmers and rural communities by providing a market for surplus soy oil while also creating jobs, diversifying our fuel supply, and reducing our greenhouse gas emissions.

Under the Bipartisan Budget Act of 2018, the biodiesel tax credit was extended for one year, retroactively for 2017, but not for 2018 and beyond. Extension of the tax incentive is important to the industry’s continued growth. ASA supports a long-term extension of the biodiesel tax incentive.

Biodiesel production benefits soybean farmers and the livestock industry. Approximately half of U.S. biodiesel is produced from soybean oil that is a by-product of soybean production, which is driven by demand for protein meal (soybeans are 80% meal and 20% oil). In addition, rendered animal fat is a significant feedstock for biodiesel and renewable diesel, further benefiting livestock industry partners.

The biodiesel tax incentive has encouraged significant investment to expand the domestic biodiesel industry and help it become price competitive with petroleum diesel. Biomass-based diesel is the most commercially-available advanced biofuel, and it provides significant economic, energy security, environmental and health benefits.

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