Domestic Fuel

“We will have enough votes” … that’s the promise from U.S. House Majority Leader Steny Hoyer when asked about the American Jobs and Closing Tax Loopholes Act, the latest piece of legislation that would reinstate the $1-a-gallon biodiesel federal tax credit.

Talk Radio News Service says the credit is part of a much larger $190 billion package that would extend unemployment benefits.

It seems only fitting that extension of the biodiesel incentive would be tied to unemployment benefits, considering the approximately 23,000 American jobs either lost or in peril since the incentive was allowed to expire at the end of 2009.

Some reports say the measure could come to a House vote tomorrow (Wednesday), but there are worries that Republicans, critical of Pres. Barack Obama’s spending so far, could kill the bill. Stay tuned…

Legislation that would reinstate the federal $1-a-gallon tax credit for biodiesel has been attached to a new bill would extend unemployment benefits.

House Ways and Means Committee Chairman Sander Levin (D-Michigan) and Senate Finance Committee Chairman Max Baucus (D-Montana) introduced the measure today:

The bill would extend for one year (through 2010) the $1.00 per gallon production tax credit for biodiesel and the small agri-biodiesel producer credit of 10 cents per gallon. The bill would also extend for one year (through 2010) the $1.00 per gallon production tax credit for diesel fuel created from biomass. This proposal is estimated to cost $868 million over 10 years.

This Business Week article says the biodiesel industry would like to see the measure passed before the Memorial Day holiday.

“We’ve gone through this game before where it looks like the game is over,” [National Biodiesel Board spokesman Michael] Frohlich said. Producers had anticipated the credit would be extended back in February…

Levin and Baucus said the tax- and-spending package may be put to a vote in the House tomorrow. It would then have to be approved by the Senate before it could be signed into law by President Barack Obama.

We’ll keep watching.

Biodiesel producers, large and small, have renewed their call for Congress to move on the federal $1-a-gallon biodiesel tax incentive.

During a recent webinar hosted by the National Biodiesel Board CEO Joe Jobe, Bernie Crowley of Delta American Fuel in Helena, Ark.; Gen-X Energy Group in Pasco, Washington President Scott Johnson; Bobby Heiser with Nittany Biodiesel; and Renewable Energy Group’s CEO Jeff Stroburg made their case to the media.

In this edition of the Domestic Fuel Cast, you can hear what they had to say, including how they not only need the tax incentive renewed now, but also how they need a more permanent solution to save jobs, to save the biodiesel industry, and considering the ecological disaster unfolding in the Gulf of Mexico, to save the environment.

Listen to the conversation in the player below.

You can also subscribe to the DomesticFuel Cast here.

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The Oklahoma Energy Security Act, House Bill 3028 sponsored by House Speaker Chris Benge of Tulsa, was passed yesterday by the House, 91-2. The bill now goes to the Senate for consideration. If the bill passes the Senate, Oklahoma will become the 32 state to have passed state renewable energy legislation. The bill would require 15 percent of all electricity generated in Oklahoma to come from renewable sources such as wind by 2015.

Although Oklahoma is a major natural gas and oil state, it imports significant amounts of coal to generate its electricity. Under the leadership of Democratic Governor Brad Henry, the state pushed for the development of wind energy and biofuels and at the end of 2009, boasted 1,130 megawatts of installed wind capacity, placing the state fourth in the Midwest behind Iowa, Minnesota and North Dakota for total wind generation. The states utilities are now planning projects to improve the grid in order to handle the extra capacity generated by additional wind energy projects.

Interesting to note, Oklahoma’s bill sets a higher standard than either of the versions of the Federal Renewable Energy Standard that is still in consideration. The House bill calls for 20 percent renewables by 2020 with the option of 5 percent coming from efficiency improvements. In addition, state governors can ask for a weaker standard if they can’t meet the Federal mandate. The Senate, however, sets the bar lower with only 15 percent of the nation’s electricity coming from renewables by 2020 while simultaneously a large portion of that energy gain coming from efficiency improvements.

Another day, more jobs lost due to Congress’ inaction on renewing the $1-a-gallon federal biodiesel tax credit.

This time, it’s the Maple River Energy biodiesel plant near Galva, Iowa. The Iowa Renewable Fuels Association says 12 of the facility’s 18 employees are being laid off until the biodiesel blenders credit is reinstated:

Delayne Johnson, General Manager of Maple River Energy, added: “Looking my employees in the eye and telling them they were being laid off was one of the hardest things I have ever had to do in my life. Despite the expiration of the tax credit, we did everything we could at Maple River Energy to keep a core key group of highly trained employees on the job. We took Congress at their word when they promised to make restoring the biodiesel tax credit their first priority in 2010. Congress has failed to live up to that promise.”

“The fact that the U.S. Congress has allowed the biodiesel tax credit to lapse for over one-third of 2010 is absolutely mind-boggling,” said IRFA Executive Director Monte Shaw. “Congress’ inaction has cost thousands of green jobs – another 12 this week. As painful as this is, if the finger-pointing between the House and Senate stops and they reinstate the biodiesel tax credit, within 24 hours many of those green collar biodiesel jobs across the country will be reinstated.”

Meanwhile, KCRG-TV in Cedar Rapids reports one of Iowa’s U.S. Senators, Republican Charles Grassley is chiding the Obama Administration for failing to make renewal of the credit a priority … even as the President just wrapped up a tour of wind turbine plant in Iowa and a biofuel plant nearby in Missouri:

“He ought to be giving some push to this, particularly when traveling southeast Iowa to say that you want a jobs bill, you want to promote green jobs, you want to promote more jobs,” Grassley said. “One little simple bill, not controversial, and you could put 23,000 people back to work right away.”

About 2,000 biodiesel jobs have already been lost this year in Iowa. The IRFA warns those layoffs could become permanent if Congress doesn’t act soon. Some leaders have promised the bill will be considered before Memorial Day.

This past week marked the 40th anniversary of the original green event, Earth Day. And the National Biodiesel Board used the occasion to call for an important tax break for the original advanced biofuel – biodiesel.

This NBB press release says renewal of the $1-a-gallon federal tax incentive is imperative for the economic health of the country and the ecological health of the world:

“Lawmakers need look no further than the National Mall to see cleaner-burning biodiesel at work powering generators this Earth Day,” said National Biodiesel Board (NBB) CEO Joe Jobe. “Not only does biodiesel have the best greenhouse gas reduction of any domestic transportation fuel, but also it is the only advanced biofuel currently in the U.S. commercial marketplace.”

Energy balance: Biodiesel produces 4.5 units of energy for every 1 unit it takes to make the fuel, boasting the highest energy balance, and the highest energy content of any American-made renewable fuel.

Versions of the bill to retroactively extend the credit have passed both the Senate and the House. But, the two chambers have not agreed upon a compromise between different bills.

A key Democrat in the U.S. House of Representatives has set a goal of Congress renewing the $1-a-gallon federal biodiesel tax incentive and sending the measure to Pres. Obama by the end of May.

The Des Moines (IA) Register reports that House Ways and Means Committee Chairman Michigan Democrat Sander Levin made the prediction:

The House and Senate have been at odds over how to pay for the various tax credit extensions that the legislation contains. Levin said the main obstacle is the need to get a filibuster-proof 60-vote margin in the Senate.

“I’m really concerned. There’s a lot of politics involved,” he said.

Industry officials believe biodiesel refineries will be able to ramp up again once they get the subsidy back because there are also mandates out there that will prompt more biodiesel use.

Federal ag department officials seem to be rooting for renewal of the $1-a-gallon biodiesel tax incentive to finally pass Congress … but no one from USDA is pressuring lawmakers to get the deal done.

During yesterday’s event in Hawaii, where the U.S. Navy and USDA pledged to work together to produce more biofuels for the service’s renewable energy goals, reporters were able to quiz Ag’s Deputy Secretary Kathleen Merrigan if the Obama Administration was pressuring Congress on the incentive’s renewal. But Hoosier Ag Today reports that her answer was less than inspiring for a biodiesel industry going further under every day without the tax break:

“It’s something Tom Vilsack has spoken publicly about, so we are clearly in support of the kind of tax support that the industry needs at this point. But we’re working with Congress on a number of fronts. We were given a wonderful suite of energy programs as a part of the 2008 farm bill. We are working diligently to get those all up and running, notices and rulemakings that we have to do in this innovative space where there’s not a lot of history of work to build upon. So we are working very closely with our colleagues in Congress on a number of fronts.”

Merrigan wouldn’t offer any guesses when Congress might finally reconcile the two different versions of the American Workers, State and Business Relief Act which includes the House bill to extend the credit through the end of 2010.

Iowa-based Renewable Energy Group has had to lay off 45 percent of its workforce in the company’s home state, due to the failure of Congress to renew the $1-a-gallon federal biodiesel tax credit.

REG is expected to meet with two key members of Congress, Senator Dick Durbin (D-Illinois) and Rep. Steve King (R-Iowa), at REG facilities in each of the congressmen’s home states.

In addition, REG Chairman and CEO, Jeff Stroburg, sent U.S. House Ways & Mean Committee chairman Sander Levin a letter pleading his case for reinstatement of the incentive:

The reinstatement and retroactivity of the biodiesel tax credit is critical to putting these employees back to work.

We know the countless issues you face each day each deserve your attention and I know you work tirelessly to address each one; however, ours is becoming increasingly critical for our survival.

The earliest Congress can take up the issue would be the week of April 12th, when it returns from spring break. Meanwhile, those REG biodiesel workers … and approximately 23,000 others across the country … are on a break from drawing a paycheck.

Meanwhile, REG has started a Facebook fan page to urge Congress to reinstate the biodiesel tax credit:

Can we get 500 emails into the House Ways & Means Committee to aid the biodiesel industry? Tell our legislators to reinstate and make retroactive the biodiesel tax credit TODAY!

“Reinstatement of the federal blenders biodiesel tax credit is a national energy security and green collar jobs issues. It is urgent for the biodiesel industry that the biodiesel tax credit, within HR 4213, be passed and sent to the President’s desk for signature as soon as possible.”

President Obama gave a speech this morning from a hanger at Andrews Air Force Base reiterating our country’s need for energy independence. This will be done, he says, through energy initiatives and the government will “lead by example.” In the background, a Navy Green Hornet jet that will fly on a mix of 50 percent biomass on earth day next month.

I believe the only group that will be truly happy after today’s speech is our frenemy Big Oil. Obama said, “So today we’re announcing the expansion of offshore oil and gas exploration, but in ways that balance the need to harness domestic energy resources and the need to protect America’s natural resources. Under the leadership of Secretary Salazar, we’ll employ new technologies that reduce the impact of oil exploration. We’ll protect areas that are vital to tourism, the environment, and our national security. And we’ll be guided not by political ideology, but by scientific evidence.”

They will be guided by scientific evidence? Whose scientific evidence? If we developed policy that was based on sound science, we wouldn’t have two pieces of legislation, the Renewable Fuels Standard (RFS2) and California’s Low Carbon Fuel Standard that are shamelessly based on the misguided and not scientifically supported theory of indirect land use.
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Pennsylvania residents might soon take the chill off their cold winter nights (and cool spring, summer and fall days and nights) with a dose of biodiesel.

This post from Heatingoil.com says a new bill introduced in the state legislature by Sen. Ted Erickson would require heating oil to be blended with biodiesel, as well as lowering the sulfur content in regular diesel:

The bill in Pennsylvania would amend a 2008 bill known as the Biofuel Development and In-State Production Incentive Act. The low-sulfur mandate would go into effect on May 1, 2011; heating oil in Pennsylvania is currently allowed to have a sulfur content of up to 2,000 parts per million. The requirement for heating oil to include 10 percent biodiesel would go into effect on May 1, 2013.

The post goes on to say the Pennsylvania Petroleum Marketers supports the bill, and the Keystone State could be joining other states in the Northeast that either already have or are proposing a biodiesel-in-heating-oil mandate.

Although it has a broad base of support across the country (unlike a certain health care measure that 60+ percent of Americans don’t favor), renewal of the federal $1-a-gallon biodiesel tax incentive seems that it will have to wait at least a month at the earliest before Congress will get to it.

This article from Reuters says with Congressional recesses coming up, the measure is unlikely to see any action until at least the middle of next month:

While the House and Senate have passed bills to renew the credit for 2010, they must agree on a common text to send to the president. “Neither the House or Senate has signaled any particulars on how they will do that,” said Michael Frohlich of the National Biodiesel Board, a trade group.

A resolution is unlikely before mid-April, said two biofuels officials. Congress soon will recess until April 13, they noted, and a final vote on the credit could be delayed until late April or later, depending on the pace of House-Senate negotiations.

So, instead of moving quickly on a bill that is projected to save 23,000 jobs that have been or are being lost by the biodiesel industry because of the loss of the credit, we have lawmakers in D.C. staying up late on a Sunday night to pass a bill (healthcare) that has only about one-third of the country’s support. Maybe they should have nick-named the measure the “Biodiesel Health Bill.”

“Biodiesel is a great fuel. It’s a great success story,” said Rob Joslin, the President of the American Soybean Association when I asked him during an interview (see below for audio) why biodiesel is so important to our country. While the biodiesel has had great success, it is currently facing a challenge – the $1 per gallon tax credit expired at the end of 2009 and has yet to be extended, although it is close.

Joslin explained to me that biodiesel is not just important for farmers and the industry itself, but also for consumers. A recent Department of Energy study showed that the biodiesel tax incentive saves consumers 35 cents per gallon at the pump. The biodiesel industry contributes $4 billion dollars to the country’s gross domestic product and generated over $866 million in direct tax revenue back into the tax coffers. In addition the industry provides 29,000 direct jobs and the number exceeds 50,000 when you factor in the indirect jobs associated with the production of biodiesel.

However, with the tax credit off the table, more than 23,000 workers have been idled. “The majority of the industry is idled because you can’t run a business on the hope that Congress will pass a bill in a future point in time,” said Joslin. “So the economies didn’t work the plant managers had to put those people in unemployment.”

Anther conundrum the industry is facing is the lack of synergies between current pieces of legislation. The RFS mandates biodiesel use and the Low Carbon Fuel Standard recognizes its low-carbon benefit; yet, our government hasn’t put into place the mechanisms for the industry to produce competitively priced fuel while it matures.
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“It is clear that Congress must pass a strong federal renewable electricity standard so that investors, developers and state policy makers are working together to achieve a common goal,” said Iowa Governor Chet Culver today during a press call to release the findings of a new wind energy report: Great Expectations: U.S. Wind Energy Development, the Governors’ Wind Energy Coalition’s 2010 Recommendations. This comprehensive report is the first ever to be submitted to Congress by a national group of governors, and today representatives of the organization including Governor Culver and Rhode Island Governor Donald L. Carcieri met with President Obama, Senator Reed, Speaker Pelosi and the minority leadership in both the House and Senate to present their findings.

Governor Carcieri noted that Congressional action on the energy bill appears to have stalled and he hoped that these bipartisan recommendations will advance the energy deliberations currently underway. He stressed, “In order to achieve energy independence in the United States, we must increase the role of wind. Why is that? Wind energy is clean, it’s cost effective and it’s abundant.”

While the main recommendations were centered around passing a Renewable Electricity Standard, developing a new interstate electric transmission system infrastructure and reducing the time it takes to permit both offshore and on-shore wind projects, there were several other recommendations of note:

• • Fully Support Coastal, Deep Water, and Offshore Wind Energy Technology and Transmission Research and Development
• • Expand the U.S. Department of Energy’s Work with the States and the Wind Industry to Accelerate Innovation
• • Extend the Treasury Department Grant Program in Lieu of the Investment Tax Credit, and Adopt a Long-Term Renewable Energy Production Tax Credit With Provisions to Broaden the Pool of Eligible Investors

Both governors highlighted the importance of creating green collar jobs through the increase of wind power. A national 25 percent renewable electricity standard by 2025 could create more than 300,000 new green collar jobs.

Governor Culver also put out a call to action to keep the wind manufacturing here in the States. “If Congress fails to pass a strong national goal on renewable energy and transmission upgrades, the continued uncertainty will cause the nation to potentially surrender wind manufacturing to other countries.”

You can click here to download a copy of the full report.

Earlier this week, Governor Jack Markell announced that he would be seeking legislation aimed at creating new green jobs, help home and businesses secure energy from alternative sources and spur the growth of emerging industries such as solar and wind power. The Clean Jobs Act would add a longer-range target to the state’s existing Renewable Portfolio Standard which sets a target for the state to receive 30 percent of its energy supplies from renewable energy by 2029.

“The purpose of the initiative – the Delaware Clean Energy Jobs Act – is simple: to create quality jobs, expand local manufacturing and establish Delaware as a national leader in the adoption of renewable energy,” Markell said. He continued, “To restore our economic promise and prosperity, the State can and will lead by example when it comes to creating efficiencies, supporting jobs and being good stewards of our environment.”

Solar power would get a boast in The Clean Jobs Act, which, if passed, would support nearly 300 MW of new solar photovoltaic systems by 2029. In addition, it would facilitate the installation of more than 1000 MW of utility-scale wind power by 2029. Hundreds, if not thousands, of new jobs would be created to fulfill this piece of legislation, and additional jobs would be created by prioritizing Delaware renewable-energy projects and incentivizing the use of locally manufactured systems.

Markell made the announcement at Motech Americas, a solar company in Newark. Motech Americas currently employs more than 70 people and is in the process of expanding manufacturing capacity. They are expected to add 75 more jobs before the end of the year. Markell was joined by many other state leaders and concluded, “We are working closely with our neighboring states to create a vibrant mid-Atlantic clean energy market, but we also want to maximize capital investment and quality jobs in Delaware. We can move more rapidly, respond to opportunities more quickly and get people back to work.”