A robust biodiesel industry can help America achieve its long-term goal of having diverse sources of energy. Biodiesel producers are also potentially important positive contributors to the Hawkeye State's economy. Consequently, Iowans will benefit directly if biodiesel producers thrive.
That's why U.S. Sen. Charles Grassley has partnered with U.S. Sen. Maria Cantwell, D-Wash., to sponsor legislation that would reinstate a tax incentive for the production of domestic biodiesel. Their proposed Biodiesel Tax Reform and Extension Act of 2014 (S. 2021) would reform and extend a $1-per-gallon tax credit for biodiesel producers through 2017.
Unfortunately, Congress has not been consistent in its support for this young industry. It has allowed the tax credit to expire three times since 2009, most recently at the end of 2013.
"When investors suspend their funding of clean energy production, jobs fall by the wayside," Grassley said in statement released by his office Feb. 14. "Continuing incentives for biodiesel and other green energy sources supports jobs, helps the environment and increases energy independence. There's every reason to support biodiesel production."
Cantwell, the bill's co-sponsor, strongly seconded the Iowa Republican's enthusiasm for bringing the biodiesel tax credit back into force.
"Investing in America's clean energy economy is the smart thing to do for our environment and America's energy security," she said. "Biodiesel is America's first advanced biofuel, which can be made from a variety of feedstocks such as cooking grease and soybeans. This legislation gives businesses the certainty they need to invest in biodiesel and the development of affordable, domestic alternatives to fossil fuels."
The failure of Congress to keep this important tax incentive consistently in place has made it difficult for the biodiesel industry to grow. It has made it almost impossible for producers to develop long-range business plans with confidence. That has made it harder to attract investors.
According to information provided by Grassley's office, when the credit was allowed to expire in 2012, production remained flat that year at 2011 levels - 1.1 billion gallons. When the credit returned in 2013, biodiesel production jumped almost 64 percent to 1.8 billion gallons.
This industry can grow to the point where further federal incentives are no longer required. For that to happen a period of assured tax incentives is needed. The legislation Grassley and Cantwell have introduced would provide the predictability investors and producers need.
The Messenger strongly supports the Biodiesel Tax Reform and Extension Act of 2014. Grassley and Cantwell deserve applause for their leadership championing this cause. Helping our nation achieve diversity in domestic energy production and less need to import energy form abroad are goals all American should back.