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Published December 28, 2011, 11:27 AM

Congress should extend biodiesel tax credit

The Dec. 31 expiration of a key incentive driving the biodiesel industry’s success — the biodiesel tax credit, could slow the momentum the industry has built in the last year.

By: Ed Hegland, Agweek

APPLETON, Minn. — Particularly in this economy, you would think a success story like the one taking place in the U.S. biodiesel industry would get the attention of Congress and convince lawmakers to continue strong domestic energy policy that is creating good-paying jobs across the country.

The Dec. 31 expiration of a key incentive driving the industry’s success — the biodiesel tax credit, could slow the momentum the industry has built in the last year. This is happening even after the lessons of 2010, when Congress allowed the tax incentive to expire and biodiesel production predictably plummeted, resulting in scores of plant closures and thousands of layoffs.

Since the incentive was reinstated for 2011, the industry has rebounded strongly and is on pace to nearly triple its 2010 production. Plants are expanding their operations, hiring new employees, buying new equipment and reducing our dependence on foreign oil.

A recent economic study found that the industry, which has plants in nearly every state in the country, is supporting more than 31,000 jobs and generating nearly $630 million in local, state and federal tax revenues. Under projected expansion by 2015, that economic impact would grow even further to supporting more than 74,000 jobs and nearly $1.6 billion in tax revenues.

Minnesota has seen this rebirth first hand. A biodiesel plant near Albert Lea, Minn., reopened in 2011 after being shuttered for more than a year. The state’s three plants are operating at capacity of more than 60 million gallons, which helps to keep local economies humming. Biodiesel is a young industry, with only about five years of commercial-scale production. With time, improved scale and new technology, it will become increasingly cost-competitive with petroleum and no longer need federal incentives. But for now, the cost of the incentive pales in comparison to the benefits of biodiesel, and to the true cost of our oil addiction.

Along with creating jobs and boosting local economies, biodiesel diversifies our energy supply so our economy isn’t held hostage when oil prices spike. Biodiesel doesn’t require military bases in far-off lands to protect oil interests or risk disastrous oil spills in sensitive ecosystems. Biodiesel significantly reduces greenhouse gas emissions that lead to global warming and that could wreak economic havoc on our infrastructure and natural resources. And biodiesel reduces harmful tailpipe emissions with significant health consequences. Biodiesel also has helped reduce the cost of soybean meal, which benefits the livestock industry. For all of these reasons, Congress should get on board and immediately pass an extension of the tax incentive. Jobs depend on it.

Editor’s Note: Hegland is Minnesota National Biodiesel board member.

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