The midterms may be over, but Congress has some business to finish before the end of the year. There is at least one issue that both sides of the aisle can agree on — namely, renewing the biodiesel and renewable diesel tax incentive.
Before Congress adjourned for the election, Rep. Dave Loebsack led a bipartisan group of his colleagues in asking congressional leaders to do just that. Now, with days remaining in a lame duck session, they should get the job done.
The tax incentive is important to the Iowa economy, and in particular to Iowa’s farmers, who are among the nation’s top producers of soybeans, harvesting a record crop of more than 600 million bushels this year. But at the same time, Iowa’s farmers have been hit hard by trade disputes. The price they expect to receive this year is at a 12-year low, and farm income overall is at one of the lowest points it’s been in the past decade.
Iowa’s 300 million gallons of annual biodiesel production — the highest in the nation — provides value for surplus soybean oil. It adds more than 60 cents of value to each soybean bushel.
Biodiesel makes an important contribution to the nation’s environment, as well. Biodiesel and renewable diesel provide higher economic value for soybean oil, animal fats and other raw materials than other uses. They are “advanced biofuels” that are at least 66 percent less carbon intensive than oil.
Through homegrown biodiesel production, Iowa makes an important contribution to the nation’s energy security. That’s vital right now, when oil prices are threatening to rise due to international disputes in the Middle East. When Iowans produce and use biofuels, they reduce America’s overall reliance on imported oil. Reducing demand for oil eases global pressure on the price.
Thanks to domestic production of biodiesel and renewable diesel, consumers pay at least 17 cents per gallon less for diesel fuel, according to an analysis by the World Agricultural Economic and Environmental Services. The savings adds up to $10.6 billion based on national use of diesel fuel in 2017.
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Congress can and should provide stability and predictability for Iowa’s biodiesel producers through strong energy policy. Since the start of the decade, the tax incentive has been extended only one or two years at a time, and many times retroactively. For 2017, the incentive was retroactively reinstated in February of this year. The market dynamics of this essentially force biodiesel producers to gamble, building the tax incentive into the price of their product. Then they must hope it comes back at the end of the year. This is no way to run a business.
Rep. Loebsack deserves our thanks for his leadership on this issue. The tax incentive benefits Iowa’s entire economy, including almost 4,000 biodiesel-supported jobs in Iowa alone. The credit on each gallon of biodiesel is shared between the fuel blender, the biodiesel producer, and the soybean farmer. When the tax incentive has been in place at the start of the year, the biodiesel industry has been able to grow with confidence. According to the Iowa Biodiesel Board, our state has 100 million gallons of idled biodiesel capacity, and every additional 100 million gallons of capacity creates as many as 3,200 new jobs.
• Lindsay Greiner is a Keota farmer and president of the Iowa Soybean Association.