U.S. soybean shippers outraged by biodiesel tax “loopholes”
U.S. soybean shippers outraged by biodiesel tax “loopholes”
U.S. soybean shippers said they’re outraged by a recent announcement that large quantities of biodiesel will be imported into the country to take advantage of the new tax incentive for biodiesel sold in the United States.
These shippers said the congressional intent of the biodiesel tax incentive is to reduce the country’s dependence on imported oil, not to allow similar imports to flood the market.
“The (Bush) 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,” said Bob Metz, president of the St. Louis-based American Soybean Association, in a statement Monday.
The association was particularly angered by the recent announcement that EarthFirst Americas’ first shipment of palm oil-based biodiesel from Ecuador had arrived in Tampa, Fla., and that additional shipments are planned. Future shipments could reach as high as 45 million gallons in 2006, and 100 million gallons by 2007.
U.S. biodiesel production in 2004, on the other hand, is expected to total about 30 million gallons, with plans to expand domestic output to 80 million gallons by 2006, and as much as 200 million gallons in 2007.
“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,” Metz said. “ASA now calls on Congress and the administration to correct this loophole.”
The increase in production of U.S. biodiesel is encouraged through the enactment of the biodiesel tax incentive last year in the so-called JOBS bill. The incentive provides a $1 tax credit per gallon of agri-biodiesel blended with petroleum diesel. Agri-biodiesel can be produced from vegetable oils and animal fats.
The American Soybean Association wants Congress and the administration to support the passage of a tariff on imported biodiesel equal to the $1 per gallon tax incentive on agri-biodiesel.
“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,” Metz said.