ASA calls for action to defend biodiesel tax incentive

The American Soybean Association (ASA) has expressed outrage over the announcement that large quantities of biodiesel will be imported to take advantage of the new tax incentive for biodiesel sold in the United States.

The U.S. Congress enacted the biodiesel tax incentive to create a new market for U.S. soybean oil and other domestic feedstocks, and to reduce the nation’s dependence on imported oil.

"Importing biodiesel will only subsidize foreign farmers and biodiesel producers with U.S. taxpayer dollars," said ASA President Bob Metz, a soybean producer from West Browns Valley, S.D. "The Administration and Congress must act immediately to eliminate loopholes that allow foreign biodiesel from exploiting a key part of our national strategy for reducing our nation’s dependence on foreign sources of energy."

ASA;s statement came after an announcement by EarthFirst Americas, Inc., that its first shipment of palm oil-based biodiesel from Ecuador had arrived at the Port of Tampa, Fla., and that additional shipments are planned that could total 45 million gallons in 2006, and 100 million gallons in 2007.

U.S. biodiesel production in 2005 is expected to total about 30 million gallons, with plans to expand domestic output to 80 million gallons in 2006, and as much as 200 million gallons in 2007.

"It was the clear intent of Congress to restrict agri-biodiesel feedstocks to a limited list of vegetable oils and animal fats," Metz said. "ASA vehemently opposed the decision by the Internal Revenue Service to interpret the statute to allow biodiesel made from vegetable oils not specifically listed in the statute, including tropical oils such as palm oil, which are not produced in the United States, to qualify for the tax incentive. ASA now calls on Congress and the Administration to correct this loophole."

The growth in anticipated U.S. biodiesel production is the result of enactment of the biodiesel tax incentive in last year’s JOBS bill. The incentive provides a $1 tax credit for each gallon of agri-biodiesel blended with petroleum diesel. Agri-biodiesel can be produced from vegetable oils and animal fats.

"ASA also calls on Congress and the Administration to support enactment of a tariff on imported biodiesel equal to the $1 per gallon tax incentive for agri-biodiesel," Metz added. "An offsetting tariff, such as used for ethanol, will serve the purpose of the biodiesel incentive in the JOBS bill, which is to enhance U.S. energy independence by encouraging production of domestic biodiesel from domestic feedstocks."

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