Targeted Tax Incentive for Producers of Biofuel Passes House

Peace chief-patrons House Bill 139 to create a targeted tax incentive for producers of biodiesel A targeted tax credit passed the House of Delegates this week to provide tax credits to producers of biodiesel fuel for their contribution of up to two million gallons of fuel each year. This bill allocates an amount of $0.01 to each gallon produced as an incentive for both corporate and private companies to produce more biodiesel and environmentally friendly fuels. This bill creates a $5,000 cap on the credit

Del. Christopher K. Peace (R-Hanover) said upon passage "With biofuels we are making our way towards a secure supply which frees us from further dependence on foreign sources of energy. Reducing greenhouse gases and economic development in our rural areas makes biofuel a win win. Bio-diesel and ethanol are cleaner burning replacement fuels made from natural, renewable sources."

According to Virginia Farm Bureau’s website, "Renewable resources can greatly benefit our society, environment, and of course the rural and agricultural economy by expanding our markets for commodities such as soybeans, corn, and agreements with wind turbine operators."

Biodiesel also supports agriculture and rural economies. One example of a successful producer is Virginia Biodiesel in New Kent County. Virginia is an excellent venue for investing in bioenergy programs like this new tax credit. Bio-fuel plants, like VA Biodiesel, can begin to produce more because of the Commonwealth's access to ports, rail and interstate along the eastern seaboard. Now new producers may choose to come on line expanding supply of this value add resource. Greater supply will lower costs and make biofuel more attractive to consumers.

A "producer" would be any person, entity, or agricultural cooperative association that, in a calendar year, produced in the Commonwealth at least two million gallons of biodiesel fuels using feedstock originating domestically within the United States.

Andrew Smith, Senior Assistant Director of Governmental Relations for the Virginia Farm Bureau stated, "Delegate Peace should be commended for working to bring the interested parties together to develop an incentive to help in increasing biodiesel production, by helping small producers. We need to develop our renewable energy sources in a way that isn't just the mega facility route, but those that are smaller community based. The increased use of these types of fuels not only reduce our addiction to foreign energy sources, but help generate new markets for our domestically grown crops here in Virginia. "

HB 139 has been referred to the Senate Finance committee and will be heard this week.