Credit where due, or not

Aug. 1, 2008
No matter where you look along the biofuels supply chain today, there is a tax credit of some sort for someone. From producers to blenders, infrastructure developers to fuel dispensers, educators to end users, there are incentives by the barrelful. On May 22, when Congress overrode a Presidential veto to pass the new Farm Bill, it assured that the funds for the development and commercialization of

No matter where you look along the biofuels supply chain today, there is a tax credit of some sort for someone. From producers to blenders, infrastructure developers to fuel dispensers, educators to end users, there are incentives by the barrelful. On May 22, when Congress overrode a Presidential veto to pass the new Farm Bill, it assured that the funds for the development and commercialization of biofuels would just keep flowing faster than ever before.

Section 9003 of the Food, Conservation, and Energy Act of 2008, for instance, provides for grants covering up to 30% of the cost of developing and building demonstration-scale biorefineries for producing “advanced biofuels.” It also allows for loan guarantees of up to $250 million for commercial-scale biorefineries.

There is a new tax credit of $1.01/gal. for producers of cellulosic biofuels (made from wood, grasses and other non-edible plant matter) and another $35 million in Commodity Credit Corp. (CCC) funds to encourage existing biorefineries to reduce their dependence on fossil fuels. There are grants of up to 25% of the cost of renewable energy systems and energy-efficiency improvements for agricultural producers and rural small businesses, and much more. (Go to the U.S. Dept. of Energy's Energy Efficiency and Renewable Energy web site at www.eere.energy.gov for a short overview and link to the complete bill.)

Some critics, however, call the U.S. investment in biofuels a drop in the bucket, and perhaps the wrong bucket at that. In June, the European Union accused American biodiesel producers of “dumping” inexpensive biofuel (about a million tons in 2007) into the European market.

They complain that U.S. producer/blender exporters benefit from two levels of subsidies — tax credits, and other financial incentives from the U.S. federal government and then again from subsidies granted by individual European governments when the fuel is sold there. This situation is not warming the hearts of American taxpayers, either, who believed they were helping to underwrite development of the domestic biofuel business to reduce U.S. dependence on foreign oil and clean up the air at home.

So today, biodiesel production is fast becoming entangled in tax and trade as well as technology issues that will have to be resolved if it is to play even a modest part in America's fuel future, much less meet production and utilization goals the U.S. Congress has set. And no one wants to take the credit for that.

About the Author

Wendy Leavitt

Wendy Leavitt joined Fleet Owner in 1998 after serving as editor-in-chief of Trucking Technology magazine for four years.

She began her career in the trucking industry at Kenworth Truck Company in Kirkland, WA where she spent 16 years—the first five years as safety and compliance manager in the engineering department and more than a decade as the company’s manager of advertising and public relations. She has also worked as a book editor, guided authors through the self-publishing process and operated her own marketing and public relations business.

Wendy has a Masters Degree in English and Art History from Western Washington University, where, as a graduate student, she also taught writing.  

Sponsored Recommendations

Tackling the Tech Shortage: Lessons in Recruiting Talent and Reducing Turnover

Discover innovative strategies for recruiting and retaining tech talent in the trucking industry at our April 16th webinar, where experts will share insights on competitive pay...

Stop Sweating Temperature Excursions

Advanced chemical indicators give you the peace of mind that comes from reliable insights into your supply chains. Compromised shipments can be identified the moment they arrive...

Stop Sweating Temperature Excursions

Advanced chemical indicators give you the peace of mind that comes from reliable insights into your supply chains. Compromised shipments can be identified the moment they arrive...

How Electric Vehicles Help You Prolong the Life of Your Fleet

Before adopting electric vehicles for commercial/government fleets, prioritize cost inquiries. Maintenance is essential; understand the upkeep of EV fleets. Here’s what you need...

Voice your opinion!

To join the conversation, and become an exclusive member of FleetOwner, create an account today!