Biodiesel kaput without fed tax credit, study says

AP News
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Posted: Dec 09, 2009 12:26 PM

An industry study says biodiesel production could stop unless a federal $1-per-gallon tax credit is extended.

The credit is scheduled to expire at year's end. Biodiesel supporters are concerned that efforts to extend the credit will get bogged down in Congress.

North Dakota Agriculture Commissioner Doug Goehring says the possible demise of the tax credit concerns him. He says the credit is important to help keep biodiesel competitive with regular petroleum-based diesel fuel.

The National Biodiesel Board financed the study by an outside economic consultant. It says if the tax credit expires, biodiesel profits will vanish and fuel output will suffer a "complete decline."

Biodiesel sales this year are expected to decline about 31 percent, and the report says the industry is operating at only 15 percent of capacity.

Archer Daniels Midland operates a biodiesel plant near Velva in central North Dakota.