Biodiesel output sets records as tax credit expiration looms again

Biodiesel production hit a monthly high of 81 million gallons in  the United States in June,  the third straight month of record volumes.

A total of 81 million gallons were produced in June, according to EPA reports, placing the industry on track to produce at least 800 million gallons this year.

Following the introduction of the $1-per-gallon biodiesel tax credit in 2005, biodiesel production climbed steadily until 2010, when Congress allowed it to lapse temporarily during the push-and-shove over health care reform and other issues. Production plunged from a record 700 million gallons in 2008 to about 315 million gallons in 2010.

This year's projected production is more than double the 315 million gallons produced in 2010, the National Biodiesel Board reported.

The resurgence in biodiesel demand after Congress reinstated the biodiesel tax incentive this year has boosted Iowa's economy, according to Monte Shaw, executive director of the Iowa Renewable Fuels Association.

"We've probably added close to 400 direct jobs this year as biodiesel plants have come online," Shaw said. Combined with jobs indirectly linked to biodiesel, he said the number could be several thousand.

The tax credit  is gain slated to expire in December, threatening the industry's momentum.

A bill to extend the tax incentive for three more years has been introduced in the U.S. Senate by senators Maria Cantwell, D-Wash., and Charles Grassley, R-Iowa.

A similar house version of the bill has been introduced by U.S. representatives Aaron Schock, R-Ill., and Collin Peterson, D-Minn.

National Biodiesel Board CEO Joe Jobe urged lawmakers to examine what's happened over the past two years as they consider whether to renew the biodiesel tax incentive.

"In this kind of economy, we need every tool we have," Jobe said.