You may not have heard of H.R. 4213. If you have, it may have been a passing reference to a "tax extender package", or something like that. The bill, officially the "Tax Extenders Act of 2009," passed the house late last year, and is being considered in the Senate right now. It covers many things, including:
Individual Tax Relief
Business Tax Relief
Charitable Contributions
Community Assistance
Disaster Relief
Energy
One other thing it does is save the life of the American biodiesel industry. I'd like to talk about that, after the fold.
Buried in the lengthy bill is section 401:
SEC. 401. INCENTIVES FOR BIODIESEL AND RENEWABLE DIESEL.
(a) Credits for Biodiesel and Renewable Diesel Used as Fuel- Subsection (g) of section 40A is amended by striking ‘December 31, 2009’ and inserting ‘December 31, 2010’.
(b) Excise Tax Credits and Payments for Biodiesel and Renewable Diesel Fuel Mixtures-
(1) Paragraph (6) of section 6426(c) is amended by striking ‘December 31, 2009’ and inserting ‘December 31, 2010’.
(2) Subparagraph (B) of section 6427(e)(6) is amended by striking ‘December 31, 2009’ and inserting ‘December 31, 2010’.
(c) Effective Date- The amendments made by this section shall apply to sales and uses after December 31, 2009.
Back in 2005, I argued against the introduction of a subsidy in the biodiesel industry. You can see that diary, which I admit was not a very accessible diary for people not familiar with the subject, here. Two of my biggest arguments back then were that 1) the incentive would create an uneven playing field in the industry, as it was $1/gallon for biodiesel made from non-recycled sources, versus $.50/gal for biodiesel made from recycled sources (what we do), and 2) the example of the Solar Hot Water industry, which had been built on incentives, and was decimated when they were removed by the Reagan administration (along with the panels on the White House).
Once the biodiesel tax incentive became law at the end of that year, and the whole industry lobbying force became dedicated toward preserving that incentive, I became determined to never let my company become dependent on subsidies. We're a locally-oriented, small-is-beautiful, vertically-integrated grassroots beacon of clean-tech, and I'd be damned if I would pin that all on a bunch of suits in Washington!
*It is worth noting that the playing field WAS leveled (we got the $1/gallon eventually), and a stupid loophole that encouraged companies to source their fuel outside of the US and sell it outside of the US was also closed. Then 2008 happened. We were having our best year ever, with petroleum prices through the roof and biodiesel demand very high. We were at 14 employees, and everything looked great... and the bottom fell out. I don't need to tell you the details, except to say that petroleum plummeted in price, and biodiesel could not respond the same way. Through no fault of our own, we became dependent on that subsidy.
We managed to scrape by with a lot of creative management strategy, including unfortunately layoffs and paycuts (management first, always), and gradually built ourselves back up and started growing again. We created a new business model that could thrive even with low petroleum prices, and it worked, but we forgot to make ourselves immune to the subsidy. And at the end of last year, even though the House had passed its renewal, the Senate was distracted by the HCR debate (which, as an uninsured American, I am deeply invested in), and the bill languished. We sent letters, and were sure it would be renewed, but no. The first of the year came around, and confidence began to grow that it would be addressed soon. It's been long enough now that the checks from Uncle Sam have long since stopped arriving, and my company is losing around $30,000/mo. For some perspective, we do about $75,000/mo in sales. THIS IS HUGE.
I understand that there are those here who would question the value of the American biodiesel industry, or biodiesel at all. Let me explain to you the view from 350 Orr Springs Road, Ukiah, CA. That is where my 16-employee company manufactures our product.
We use trucks powered on our cleaner-burning, renewable, recycled diesel alternative fuel, to collect restaurant fryer grease from around 1000 restaurants in our area. We turn that into the aforementioned biodiesel fuel at a production plant that is similar to a small food processing facility in scale and operation. Nothing like a refinery. We then deliver that renewable, non-fossil-based fuel, tested carefully for quality in our lab, in biodiesel-powered trucks to the end user customers. People like you. It's a closed-loop, focused on our region. We've been written about extensively, and have received awards for our efforts. We are always working on making things more energy efficient. We use recycled toilet paper and compost our food scraps. My wife makes organic fudge for the employees fairly often. I am involved in a local movement to create green business certification in our area.
All of this is threatened if we can't stop the bleeding. We created a plan to implement to get us to a point where we're "subsidy-proof", and some parts of it are working well, but we're not there yet. It's very difficult to patch up that big of a hole.
AND HERE'S THE THING: MOST OF THE INDUSTRY, WHICH COMPRISES TENS OF THOUSANDS OF JOBS, HAS IT FAR WORSE THAN US RIGHT NOW. MOST PRODUCTION HAS SHUT DOWN. MANY HAVE BEEN LAID OFF ALREADY.
Even if the bill is passed tomorrow, it will be a hard road for us, as it will take some time to implement. The bottom line is, we need this. It's going to be really hard to keep many of my employees if we don't get it, and it would be a minor miracle if we just managed to survive in that situation (although over 8 years of doing this has taught me to be optimistic).
Thank you for reading this diary, and please consider calling your Senators and voicing your support for H.R. 4213, The Tax Extenders Act of 2009.
