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Biodiesel Tax Credit Extension Act: A Win for Fuel Retailers and Consumers

On May 2, 2025, a group of bipartisan lawmakers introduced the Biodiesel Tax Credit Extension Act of 2025, aiming to continue the 40A biodesel blender’s tax credit for two additional years. This initiative has garnered support from key organizations including NATSO, SIGMA, and the National Association of Convenience Stores (NACS), reflecting a unified front to bolster America's biofuels sector.

Legislation Highlights

The proposed legislation allows taxpayers the flexibility to choose between the Biodiesel Tax Credit and the '45Z' Clean Fuel Production Tax Credit. This is a critical adjustment for fuel retailers as the availability and affordability of biodiesel have sharply declined, with renewable diesel and biodiesel volumes plummeting by 58.8% after the first expiration of the biodiesel tax incentive at the end of 2024.

Industry Insights

David Fialkov, the Executive Vice President of Government Affairs for both NATSO and SIGMA, emphasized the significance of the legislation during this pivotal moment. He stated, “This legislation injects much-needed certainty into biofuel markets at a time when American access to low-cost biofuels is dwindling.”

The need for clarity within biofuel markets cannot be overstated, particularly in light of the detrimental impacts following the Biodiesel Tax Credit expiration. Fialkov expressed optimism that this straightforward legislative effort would alleviate confusion and counteract unnecessary complexities that have previously obstructed market growth.

Economic Implications

Since its inception in 2004, the biodiesel tax credit has proven instrumental in encouraging fuel retailers to upgrade their infrastructure for selling low-carbon alternatives, thereby driving consumer demand for renewable fuel blends. The potential benefits extend beyond the retail sector – the biodiesel tax credit is pivotal in reducing greenhouse gas emissions from the transportation sector and fostering job creation.

As the biodiesel tax incentive lapsed, many producers faced harsh realities. The gloomy outlook led several biodiesel plants to shut down or significantly curtail operations, creating a precarious situation for future biofuel availability. Fueled by the renewed support for the biodiesel blenders' tax credit, stakeholders are hopeful for a resurgence in supply and subsequent restoration of competitive pricing for consumers.

Legislative Support and Future Outlook

The bipartisan chorus surrounding the Biodiesel Tax Credit Extension Act, led by Representative Mike Carey (R-Ohio) and supported by other influential lawmakers, symbolizes a significant shift in recognizing the value of renewable fuels. With over 152,000 convenience store outlets in the U.S. alone, this act is expected to mitigate inflationary pressures and promote lower shipping costs through reduced diesel prices.

According to Matt Durand, Deputy General Counsel at NACS, the act is a “proven policy for bolstering domestic production and reducing consumer costs.” He and other stakeholders have echoed the urgent need for Congress to act swiftly to renew the biodiesel tax incentives, as the necessity for affordable fuel options remains paramount today.

Biodiesel has historically been the most consumed biofuel within commercial trucking. By renewing the tax credit, the federal government can further promote reductions in carbon emissions from the commercial trucking fleet. Extended support for biodiesel not only ensures that retailers can provide lower-cost options but also fortifies the sustainability of the biofuel industry's future.

As discussions around the Biodiesel Tax Credit Extension continue, the collective voices of fuel retailers, truck fleets, and various industry stakeholders advocate for a timely resolution that prioritizes stable fuel supplies, reduced costs, and environmental sustainability. The ultimate outcome will play a significant role in shaping the landscape of renewable fuel production and consumption across the United States.