House Democratic leaders say their plan is to hold a vote by Memorial Day on extending the federal biodiesel tax credit that expired last Dec. 31. When the measure is brought to the House floor, it will part of a much larger bill intended to extend tax benefits for a wide range of government-favored activities.
Other biofuel subsidies also are scheduled to expire relatively soon, and supporters of all of these programs are concerned about paying for them.
The following is a summary of key biofuel payment/credit/tariff deadlines. Ethanol and biodiesel proponents continue to push for a five-year extension of their incentives for those expiring (or expected to expire in the case of biodiesel after its limited extension) at the end of this year. But a two-year extension is seen as a more likely outcome at this time.
Scheduled to Expire Dec. 31, 2010
- 45-cents-per-gallon tax credit for distributors who blend ethanol with gas. (The 2008 farm bill lowered the ethanol blender subsidy from 51 cents per gallon to 45 cents.)
- 10-cents-per-gallon tax credit for small ethanol producers, limited to $1.5 million per plant.
- 54-cents-per-gallon tariff on imported ethanol. The United States imposes two duties on ethanol imports: a 2.5 percent ad valorem tariff plus an additional duty of 54 cents per gallon. According to data from the U.S. International Trade Commission, the combined duties have amounted to about a 30 percent tariff on ethanol imports.
- NOTE: While ethanol proponents point out that the import tariff is a revenue generator, an analysis last year by the U.S. International Trade Commission estimated that reducing the duty on ethanol imports would lead to a net overall gain for the United States that could reach $356 million annually. (The Brazilian Chamber of Foreign Trade recently announced a temporary suspension of the 20 percent tariff charged by Brazil on ethanol imports. According to the Chamber, the ethanol tariff will remain at zero until the end of 2011.)
- $1-per-gallon biodiesel credit (assuming Congress approves an expected one-year extension to the now-lapsed credit).
Expiring Dec. 31, 2012
- $1.01-per-gallon tax credit for producers of cellulosic biofuels from wood and grasses.
