As lawmakers scrambled to keep the federal government open last week, biofuels lobbyists hustled for a payday. Tucked inside the budget deal that found its way to President Trump’s desk and into law was a retroactive extension of the biodiesel blenders tax credit. Now the industry is about to get paid.
Biodiesel production nearly had a record year in 2017, according to EPA data, churning out 2.6 billion gallons. Now the taxpayer will top off the industry with an extra dollar for every gallon already sold.
But the industry isn’t happy with its $2.6 billion-dollar windfall because the credit is only retroactive. It won’t apply to new production, meaning that their bottom line will hinge on future lobbying efforts. Already the industry is panning the free money as good but not good enough.
“While we are pleased the credit was restored for 2017, in 25-plus years of monitoring federal legislation, this is the most ridiculous outcome I’ve ever seen. We will continue to work for a quick extension for 2018 and ultimately a common-sense long-term extension,” said Iowa Renewable Fuels Association Executive Director Monte Shaw in a statement.
The next fight over the tax credit will more than likely come in the farm bill. Republicans started signing checks to the biodiesel industry during the George W. Bush administration in 2005. It’s more than likely that they will continue, and it’s even possible that they will increase under Trump.
But why does a multi-billion-dollar industry need taxpayer support? As Reuters reports, biodiesel producers are reliant on federal aid and cannot compete without it. And why do they deserve the money in the first place? As Shaw and other industry leaders always argue, the petroleum industry also gets subsidies, so it’s only fair.
“When you consider that petroleum is in its 105th consecutive year of federal tax preferences, it is ridiculous that U.S. House members objected to the two-year extension. Today, just as yesterday, the industry has to produce and market biodiesel with no certainty over what the final financial situation will be,” Shaw wrote. “That is not any way to run a business.”
A better business practice would require creating a product that doesn’t require taxpayer support. Similarly, good government would require ending peculiar subsidies to both the oil and biodiesel industries.