The House and Senate are both scheduled to vote on a tax extenders package this week that would extend incentives for biofuels, energy efficiency and alternative vehicles. Will this bill do enough to revive the struggling biodiesel industry? During today's OnPoint, Joe Jobe, CEO of the National Biodiesel Board, explains why the biodiesel industry is at risk of collapsing and how a tax credit extension would help.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Joe Jobe, CEO of the National Biodiesel Board. Joe, thanks for being here.
Joe Jobe: Good to be here, Monica, thank you.
Monica Trauzzi: Joe, the Senate is pushing for a vote next week on a tax extenders bill, which would include an extension of the biodiesel tax credit. We've been hearing a lot from your industry about it being at risk of collapsing essentially. How important is the tax extension to getting your industry back on its feet?
Joe Jobe: It's absolutely essential. The biodiesel tax credit has really been one of the most effective pieces of energy policy in recent history and a lot of people don't realize that the biodiesel tax credit is really only five years old. But in those five years it's been extraordinarily effective in building America's first advanced biofuel. Just as an example, in just those five years, private investment has come in. It has created an environment, an economic environment for innovation to flourish in more than 150 biodiesel plants throughout the country, not just in the Grain Belt, but scattered, regionally diverse, raw material diverse made from an abundant variety of regionally available agricultural byproducts. More than 23,000 jobs have been generated. It is stimulating plant science research and a number of other things, very positive things, and, most importantly, it has been a net benefit to the U.S. Treasury because of increased federal and state and local tax revenues that have been generated. Now, since this industry has been developed, now Congress has allowed the tax credit to lapse temporarily and it's essentially shut down one of the most successful alternative fuel industries that's been developed.
Monica Trauzzi: So, in a matter of five months there's been that much of a dramatic change?
Joe Jobe: Absolutely. The thing that the biodiesel tax credit does is it creates an economic driver for the industry that reduces the cost to consumers and that has been very effective in doing that. And so, yeah, we're in our fifth month of the lapse. Early on, the biodiesel industry many producers kept producing to keep from having to go into shutdown mode, to keep from having to layoff all of their employees, to keep their main customers supplied. But each day, each month and day, week that the credit remains lapsed more jobs are being lost and more plants are going out of business.
Monica Trauzzi: What's the outlook for when the industry may be self sustainable and will no longer require a tax credit?
Joe Jobe: Well, the petroleum industry, which is an industry that is very mature, very wealthy, has enjoyed government support, energy policy support for more than 50 years and billions of dollars of government support. The biodiesel industry is less mature. It's an emerging industry. It has a whole lot of promise and so, ultimately, we believe that the biodiesel industry will not require a tax credit, but in the near term, since we have been commercialized for just five years and have shown so much success in that timeframe, it needs to be a more stable timeframe. Both houses have introduced longer-term extensions. Senate Bill 1589 in the Senate, H.R. 4070 in the House, both of those measures, bipartisan measures would extend the tax credit for five years.
Monica Trauzzi: And do you expect a vote to happen on those measures before Memorial Day?
Joe Jobe: We are strongly urging doing everything we can to encourage Congress about the urgency of this issue, particularly to try to get this done before Memorial Day. But we are going to keep working at this until this gets passed. It's just absolutely critical for Congress to act on this.
Monica Trauzzi: There are several items that are being rolled into this same tax extenders package, including possibly a provision that would raise oil spill liability from $75 million to $10 billion. Could something like that derail the package, the entire package?
Joe Jobe: You know, there are a number of processes going on. The issue of finding the revenue raisers in order to meet PAYGO restrictions has been the biggest holdup. This extension measure, this tax extenders package is really supported by both parties and the controversy has really been…the arguments have been finding those revenue raisers. And so some of those revenue raisers are more controversial than others and so, really, we do expect that to be the continued challenge, is finding an agreement on those revenue raisers.
Monica Trauzzi: Tax extenders aside, is the Obama administration doing enough to beef up the push for biofuels and biodiesel?
Joe Jobe: Well, President Obama, two weeks ago, was in my home state of Missouri at a biofuel facility promoting more use of sustainable biofuels. And could he do more? Yes, we'd like to see more support of biodiesel, particularly in this time when America has now finally achieved the first advanced biofuel. Biodiesel, according to the EPA's rulemaking, final rulemaking on the Renewable Fuel Standard, which came out in January, biodiesel meets the statutory requirements and EPA's guidelines for an advance biofuel, meaning it meets the greenhouse gas reduction thresholds. So, we now have America's first commercialized, advanced biofuel and Congress has allowed that policy to go backwards. So, it's just absolutely critical that all government leaders, from the administration to Congress, step up and make sure that this gets advanced forward.
Monica Trauzzi: What kind of help/support are you looking for in the climate and energy package that's moving its way through the Senate?
Joe Jobe: You know, because the climate bill looks at greenhouse gas reduction and various things and because biodiesel, in general, has a very, very positive greenhouse gas reduction impact, biodiesel is well-positioned in future climate change legislation. We've kind of been looking at this proposed climate bill and some of the details for how it will address biofuels, particularly, are still unclear. Congress has said they're setting aside June for a time to debate energy and an energy package and including climate legislation and so we look forward to that debate.
Monica Trauzzi: OK, we're going to end it there. Thank you for coming on the show.
Joe Jobe: Thank you, Monica.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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