The 25,000 members of the American Soybean Association (ASA) are applauding the introduction of legislation in both the United State House of Representatives and the U.S. Senate that would extend the biodiesel tax incentive to 2010.

Unless Congress passes an extension, the current biodiesel tax incentive, which took effect on Jan. 1, 2005, will expire on Dec. 31, 2006.

"Biodiesel is an essential component of a comprehensive national energy policy that will help the United States reduce its dependence on imported oil," said ASA President Neal Bredehoeft, a soybean producer from Alma, Mo. "Every gallon of biodiesel processed from domestically grown soybeans also helps thousands of farmers and their families and the rural communities in which they live."

The biodiesel tax credit is the single most important incentive for the fuel. The credit, which amounts to a penny per percentage of biodiesel blended with conventional diesel, was included in the JOBS Act of 2004 at the insistence of Senator Chuck Grassley (R-Iowa).

As it expires at the end of 2006, its extension is the top legislative priority of the ASA. Representatives Kenny Hulshof (R-Mo.) and Earl Pomeroy (D-N.D.) introduced legislation doing just that in the House. Senators Blanche Lincoln (D-Ark.) and Jim Talent (R-Mo.) introduced an identical extension of the biodiesel tax incentive in the Senate.

"The ASA has long advocated that soybean farmers stand ready to help our country meet its energy needs, and the extension of the biodiesel tax incentive will allow us to do our part," Bredehoeft said. "ASA greatly appreciates the steadfast support of our friends in Congress who have routinely championed the many benefits of biodiesel and the need for a tax incentive to nurture this fledgling industry. Once again, these leaders have gone to bat on our behalf in Washington, and we extend sincere thanks for their support."

Earlier, soybean producers were elated to hear President George W. Bush clearly articulate the role soybean farmers will play in the nation’s future energy policies. In his May 16 remarks at a biodiesel refinery in West Point, Va., President Bush said, "Biodiesel is one of our nation’s most promising alternative fuel sources. And by developing biodiesel, you’re making this country less dependent on foreign sources of oil."

"President Bush said that our dependence on imported oil is like a foreign tax on the American dream," Bredehoeft said. "We all need to work together to find alternative solutions to this predicament and soybean farmers are prepared to do their part to help make this country less dependent on foreign oil by producing homegrown biodiesel."

By its very nature, diesel contains 20 percent more energy in a gallon of fuel than a gallon of gasoline. In the U.S., millions of trucks and buses already burn diesel fuel, as do railroad locomotives, commercial marine vessels, construction and agricultural equipment. These vehicles can, with few or no modifications, utilize biodiesel-blended fuels, which reduce the country’s dependence on imported petroleum.

"Biodiesel offers many environmental and operational benefits as well," Bredehoeft said. "It has the highest energy content of any alternative fuel, which is especially important in heavy-duty diesel applications."

Independent studies show that the use of biodiesel in conventional diesel engines results in a substantial reduction of emissions, including carbon dioxide and other air toxics. Moreover, it increases the lubricity of diesel, which is especially valuable when the sulfur content of diesel is reduced.

Biodiesel is the only alternative fuel to have passed the rigorous Health Effects testing requirements of the Clean Air Act, and it is non-toxic, biodegradable and free of sulfur.

The biodiesel tax incentive is structured as a federal excise tax credit. It will lower the cost of biodiesel to consumers in taxable and tax exempt markets. Based on baseline estimates from the U.S. Department of Agriculture for future soybean production, over a five year time period the biodiesel tax provisions could add almost $1 billion directly to the bottom line of U.S. farm income. In addition, the provisions will significantly benefit the U.S. economy and could increase U.S. gross output by almost $7 billion.

"ASA’s main goal is to have this extension legislation in circulation with the intent that it will be included in a final energy bill," Bredehoeft said. "We are confident that our champions in Congress will help us achieve this vitally important goal."