Two additional bills have surfaced that would retroactively renew the $1 per gallon federal biodiesel tax credit, which expired on December 31, 2016. The first is a companion bill to legislation offered in the Senate last week, known as the "American Renewable Fuel and Job Creation Act." The House bill (H.R.2383), offered by Reps. Kristi Noem (R-SD) and Bill Pascrell (D-NJ), is identical to the recently introduced Senate bill (S.944). Both bills would extend the biodiesel tax credit for three years and move eligibility from blenders to U.S. producers.
Another bill has been offered by Senator Ron Wyden (D-OR), Ranking Member of the Finance Committee, with the support of 21 Democratic cosponsors. The "Clean Energy for America Act" (S.1068) retroactively renews the biodiesel tax credit at the blender level through 2018. Beginning January 1, 2019, the bill replaces it with a new "Clean Fuels Production Credit" that offers a tax credit to producers of renewable fuels. The credit amount would be based on the lifecycle greenhouse gas (GHG) performance of the fuel. A fuel's performance must show a 25% reduction in GHG emissions from 2015 levels to obtain a 7 cents-per-gallon tax credit, progressing up to a $1 per-gallon credit for zero or net-negative GHG emissions.
It appears heating oil would be ineligible for both the extension of the biodiesel blenders' tax credit and the proposed clean fuels production credit as proposed by Wyden's bill. NEFI has reached out to Senator Wyden and Finance Committee members from New England to clarify these issues. Also of interest, S.1068 would replace recently expired tax incentives for energy efficient residential and commercial buildings and retrofits with performance-based incentives. Contractors would receive a $1,500 credit for new homes that are at least 25% more efficient, up to a maximum of $3,000. Owners of existing homes would receive a $1,750 credit if they achieve at least a 20% energy reduction, up to a maximum of $6,500. Owners of commercial buildings would qualify for a $1.25 per square foot deduction for a 20% reduction in energy use, up to a maximum of $9.25 per square foot.
NEFI supports equitable (i.e., fuel-neutral) tax incentives for energy efficiency improvements to existing homes and commercial buildings. We also strongly support an extension of the biodiesel tax credit. Many of the region's wholesale and retail heating oil distributors are concerned that a producers-only tax credit would disadvantage biodiesel imports from Canada and cause supply disruptions and higher consumer prices for biodiesel and Bioheat(R) Fuel. The fate of recently expired tax credits, including the biodiesel and building efficiency tax credits, is likely to be decided during the broader debate over tax reform. NEFI is reviewing legislation closely and discussing next steps.