Rep. Boswell makes stop at CIE

The Biodiesel Producer Tax Credit was established by the Energy Policy Act of 2005. That tax credit amounted to $1 per gallon for producers. The tax credit was allowed to expire at the end of December, creating disruption in the biodiesel market and a decrease in demand.

“Distributors in Iowa can buy biodiesel, but they take the risk of not getting that tax credit back for awhile,” said Alicia Clancy, corporate affairs coordinator with Renewable Energy Group, parent company of Central Iowa Energy’s biodiesel plant in Newton. “Many just can’t take that risk.”

Currently, there are 74 extensions, which included the biodiesel tax credit, waiting to be passed by the U.S. Senate. Congressman Leonard Boswell made a stop at Central Iowa Energy Wednesday morning to talk with employees and CIE officials about the bill’s status.

“This is very important,” Boswell said. “Here’s something we can provide right here in central Iowa and we don’t have to be in bondage (to foreign oil companies).”

Boswell said this impression from talking with his fellow congressmen was that the extension would eventually pass.

“The feeling I got was that others in Congress think this is important and it needs to be done. If you stop this product it creates a big bump in the road.”

The $1 tax credit incentive is structured to allow the value of the credit to be reflected in the market price of the fuel. That means the tax credit reduces the price of pure biodiesel by $1 per gallon. Without the tax credit, the price of biodiesel will be significantly higher than petroleum diesel. This will cause market demand for biodiesel to evaporate, Clancy said, and the domestic production, marketing and use of biodiesel in the U.S. will cease. More than 50,000 jobs in the biodiesel industry would also be in jeopardy.

cutline:

Representative Leonard Boswell met with officials from Central Iowa Energy Wednesday morning to discuss the status of pending legislation to extend the $1 per gallon biodiesel tax credit. The credit lapsed last year, creating market disruption and a decrease in demand. Pictured are from left, Steve Falck, manager for state government affairs for Renewable Energy Group, Boswell, Derek Winkel, Central Iowa Energy general manager, and Gary Haer, vice-president for sales and marketing for Renewable Energy Group.