National Biodiesel Board
3337A Emerald Ln.
P O Box 104898
Jefferson City, MO 65110-4898
(573) 635-3893 phone
(800) 841-5849
(573) 635-7913 fax
www.biodiesel.org

NEWS
FOR IMMEDIATE RELEASE

Contact: Jenna Higgins/NBB
800-841-5849

April 18, 2007

National Biodiesel Board Testifies on Impact of Public Policy
NBB Addresses Congress in Alternative Fuels Hearing

JEFFERSON CITY, Mo.– Members of Congress today called on the National Biodiesel Board (NBB) to discuss biodiesel’s impact on energy security and other societal benefits. The testimony was heard by the Committee on Energy and Commerce Subcommittee on Energy and Air Quality. The hearing was called to examine alternative transportation fuels and the roles they can play in helping enhance our nation’s energy security.

“Biodiesel is a viable option to begin re-taking control of our energy future,” NBB Director of Government Affairs Scott Hughes told the subcommittee. “There are many market dynamics that are working in favor of the biofuels industry today, and which, if they continue into the future as anticipated, will provide a bright future not only for the industry but the nation overall.”

Hughes stressed that biodiesel will continue to be a strong partner in the growth of the biofuels industry. Biodiesel can be a substantial tool in the nation’s overall move toward energy security as it:

Adds to the distillate fuel pool;
Adds to U.S. “refining” capacity;
Directly replaces imported finished diesel fuel;
Utilizes agricultural products; and
Stimulates rural and urban economies and creates jobs.

In his testimony, Hughes said two federal policy measures have been extremely effective in stimulating biodiesel’s increased production and use. One is the Bioenergy Program, which stimulates crop use for energy production. The other is the biodiesel blenders tax credit, which passed in the JOBS Act of 2004. That incentive has been the primary stimulant since 2005 for the dramatic increase in new plants, jobs, and local investment in biodiesel, bringing economic opportunity to both rural and urban areas. Since it took effect, biodiesel producers have grown more than 4-fold. Today there are 105 plants capable of producing 864 million gallons of domestic biodiesel from coast to coast.

“Because of these policy measures, biodiesel is beginning to make an impact on our nation’s energy supply. These measures are all working extraordinarily well, but are soon scheduled to expire, and must be continued in order to keep the growth in biodiesel going strong,” he said.

But Hughes cautioned that the emerging biodiesel industry is also subject to unintended consequences of public policy.

“Amidst all of the positive news and investment going on today, there is one potential threat that we all fear could, in a few short years, severely undermine the economic benefits from a growing biodiesel industry,” Hughes said. He referred to the Internal Revenue Service (IRS) recently issuing its interpretation of the Energy Policy Act’s Renewable Diesel Tax Credit provision. The IRS ruling expanded the definition of “renewable diesel” to allow large integrated oil companies to claim a dollar-per-gallon tax incentive as part of the traditional refining process using existing petroleum refineries and raw vegetable oil or animal fats.

The so-called “renewable diesel” is not biodiesel and does not offer many of the benefits that biodiesel does, such as adding to refining capacity, improving certain performance characteristics, reducing emissions like particulate matter when burned in a diesel engine, and adding jobs to the economy. Unlike biodiesel, renewable diesel has not gone through 15 years of research and regulatory process, such as completing Health Effects testing and achieving an ASTM standard (ASTM D-6751). Yet it receives the same tax incentive as biodiesel, and the expanded definition of renewable diesel will increase the profits of large oil companies while stunting the growth of the promising biodiesel industry.

“This policy, if continued, could negate the economic gains realized by a vibrant biodiesel industry, as well as stymie investment into the industry” which has provided the U.S. some its most recent expansion in ‘refining capacity’ through the construction of new plants, he said. Public opinion research shows 82% of Americans support a federal tax incentive for biodiesel.

For more information about biodiesel, visit Biodiesel.org.