WASHINTON - Two U.S. senators pledged on Tuesday to take up legislation early next year to extend the biodiesel tax credit as it looks likely action will not be taken on it this year.

An industry group complained that if a bill was passed by Congress early next year to extend the credit, it would not be enough to stop plants from closing after the credit expires on December 31.

Sen. Max Baucus, a Democrat from Montana who is chairman of the Senate Finance Committee, and the panel's top Republican, Sen. Charles Grassley of Iowa, said they would take up legislation to extend the $1-per-gallon tax credit and an array of other tax breaks as soon as possible after Congress convenes next year.

The credit extension has been delayed by the health care debate and because it has been linked with other tax incentives.

The renewable fuels industry was angry that legislation has not yet passed in the Senate. A so-called extenders bill passed in the House of Representatives earlier this month that would keep the credit going to the end of 2010. But industry had wanted five-year extensions to be passed before the end of the year.

"Very frustrating," said Monte Shaw, director of the Iowa Renewable Fuels Association. "Congress has really dropped the ball on this."

He said he appreciated that Baucus and Grassley hope to move on it early next year. But he said biodiesel plants are already losing contracts to make the fuel because of the credit not yet being renewed and oil refiners are afraid they will not get the credit for blending the fuel.

Plants will shut after December 31 and thousands of people could lose their jobs until the credit is renewed, Shaw said.

The White House has said the extension of the tax credit for biodiesel would provide "clean energy companies with the certainty they need to make critical investments in the nation's energy future."

Soybean oil is a primary feedstock for making biodiesel. Eleven percent of this year's soybean crop will be used for biodiesel, according to a U.S. Department of Agriculture estimate.

The American Soybean Association has said failure to renew the incentive could reduce prices paid to farmers for their soybeans by 25 cents or more per bushel.

Story Copyright (c) 2009 Reuters Limited. All rights reserved.

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written by Fran Tracy, December 24, 2009

Biodiesel is not a viable alternative to petroleum. It ruins motors when the water separates out and sits in the motor. This has been a ral problem in boats and aesional equipment. If they have to have a dollar per gallon tax credit, it is not ecconomically viable. The gas milage that vehicles get is much less thus causing the cost of transportation to be much higher.
Lets just drill wells in the US and use our oil.
Fran

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Biodiesel does not ruin engines
written by JIm, February 14, 2010

Biodiesel has better lubrication quality's than Low sulfur diesel which currently dries out seals and has poor lubrication due to the removal of the sulfur.Many issues expierenced with biodiesel are due to the solvent properties of biodiesel cleaning out the entire fuel system of deposits from petro diesel. This can cause fuel filter plugging during the initaial change over if not monitored. Biodeisel is required to meet strict ASTM speccifications unfortunetly like petro diesel. Poor quality fuels not meeting ASTM can and will cause issues no matter the engine.Biodiesel has 8% less energy or BTU's per gallon equates to 1-2 miles per gallon loss at most Biodiesel has a higher cetane or better ignition properties than petro diesel. I have been running 100% biodiesel for over 5 years with no issues and over 200,000 miles.FYI water and sediment are part of ASTM testing parameters.JIm

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