Takeaways

The blenders tax credit for biodiesel and renewable diesel is retroactively reinstated.
A “special rule” calls for a one-time claims process to speed credit for the years it lapsed.
The provision treats renewable diesel the same as biodiesel.

On Dec. 20, 2019, President Trump signed into law a new spending deal that includes an historic five-year extension of the biodiesel blenders tax credit. The deal reinstates the blenders tax credit for biodiesel and renewable diesel retroactively from its expiration on Jan. 1, 2018, through Dec. 31, 2022. The legislation also includes a “special rule” that directs the Treasury Department to develop a one-time claims process to speed payment of the credit for years 2018 and 2019, when it lapsed.

The credit provides a $1.00/gallon tax credit for biodiesel and biodiesel mixtures, and the small agri-biodiesel producer credit of $0.10/gallon. Additionally, the provision treats renewable diesel the same as biodiesel, though there is no small producer credit.

The credit lapsed starting in 2018 due to congressional inaction. The prolonged lapse has had a significant effect on American biodiesel manufacturers. Many facilities had idled production, cut output and halted expansions, retrofits and new investment projects prior to the extension.

The longer-term return of the biodiesel tax credit means greater stability and certainty. Never in its 15-year history has the biodiesel tax credit been given such a long duration. The longer duration should make attracting additional investment into the industry somewhat easier than in the past.