December 17, 2019

Tax Extenders Deal Retroactively Includes Key Biofuels Credit, Drops Others

A last-minute deal to extend several expired and expiring tax provisions was reached among House, Senate and Trump administration negotiators, ending months-long speculation about the package. The deal, which includes a retroactive extension of the biodiesel and renewable diesel tax credit, will be included as an amendment to the appropriations bills set to be approved by Congress and signed into law before the current government funding expires at the end of this week.

While passing an end-of-the-year tax extenders package to address short-term tax credits is nothing new for Congress, its prospects were uncertain this year given the increased tensions surrounding impeachment and the broader disagreement between the House and Senate in the spending debate. The deal is a mixed bag of priorities, with numerous other energy-related credits — including those for solar investment, electric vehicles and others — not making the final cut.

The biodiesel and renewable diesel tax credit, which expired at the end of 2017, will be extended through December 31, 2022, at its full $1/gallon amount. The legislation 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.

News of the tax extenders deal was broadly welcomed by the biofuels and refining industries, both of which benefit from the credit. Both stakeholder groups will now turn their attention to the Environmental Protection Agency (EPA), as the agency is expected to release its Final Rule on Renewable Volume Obligations for 2020 (and 2021 for biomass-based diesel) this Friday.

While EPA typically publishes RVOs in November, this year’s process was delayed while the Trump administration released an interim draft proposal addressing how it would handle volumes removed through the Small Refinery Exemption (SRE). The EPA’s determination on SREs will be closely watched by both groups, as it remains a hot-button issue for the biofuels industry even with the extension of biofuels credits.

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