Government working with biodiesel industry to make alternative fuel a reality

Sunday, November 18, 2007 | 10:00 a.m. CST; updated 5:05 a.m. CDT, Tuesday, July 22, 2008

Reading the Oct. 31 op-ed by Galen Suppes, “Americans suffer when major oil companies put taxpayer money to unintended uses,” made me think of my youth and listening to Paul Harvey’s radio stories. While I agree with Mr. Suppes that the two issues raised are important, readers need to know “the rest of the story.”

I am very familiar with the issues identified by Mr. Suppes as I worked on both of them in Washington, D.C., as a consultant to the biodiesel industry. It is, unfortunately, true that overseas companies have effectively found a tax loophole and are abusing the federal biodiesel tax credit that was created to help stimulate the U.S. economy and reduce imported petroleum-based oil. The first shipment of “splash and dash” fuel ­— biodiesel shipped to U.S. ports to receive the biodiesel tax incentive, then shipped back overseas again — was identified in 2006. But the U.S. biodiesel industry publicly opposed these actions and, working closely with Congress, sought remedies. Our Missouri delegation has been both supportive and helpful with these efforts. Congress IS working to find a solution in a way that is compliant with the World Trade Organization.

Mr. Suppes also correctly identified a second issue — that large, integrated oil companies have now been given a $1 per gallon tax incentive to blend raw fats and oil into diesel fuel. Certain oil companies like ConocoPhillips successfully petitioned the U.S. Treasury to receive this subsidy for what has been termed, “co-processed renewable diesel.” While I am encouraged that oil companies are looking at renewable fuel options, the biodiesel industry believes the renewable diesel credit is an oversubsidization of existing oil companies. Unlike biodiesel plants, this process does not add fuel-refining capacity. In a recent interview, Jim Mulva, CEO of ConocoPhillips, said lack of refining capacity is the reason energy prices are skyrocketing.

Again, I feel that Missourian readers need to know that elected officials are working to craft policy to remedy the situation. The House of Representatives passed a bill in August that would not allow co-processed renewable diesel to claim the $1 per gallon tax credit. The House tax writing committee explained, “The Committee believes that the tax incentives for renewable diesel should be used to encourage the building of new plants to provide new refining capacity for renewable diesel. The incentive was not intended to subsidize existing petroleum refining capacity.” Congressman Kenny Hulshof, R-Mo., is a co-sponsor of the original bill and has supported efforts to correct the situation. If you want to see the additional benefits of a biodiesel plant, just look at the facility in Mexico, Mo. The Mid-America Biofuels plant employs approximately 20 people and buys local resources, contributing to our own economy rather than to that of the Middle East.

As with any alternative new fuel, biodiesel is not going to make us energy independent overnight. But joined with the other emerging technologies and strategies, such as energy conservation, it can help us complete this journey.

Now you know the rest of the story.

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