US tax loophole gives $1 per gallon biofuel blending credit to producers adding 0.1% petroleum to imported biodiesel

In Europe, biodiesel producers are complaining about a US tax loophole that allows traders to capture a US tax credit of $1 per gallon by importing Malaysian biodiesel, adding 0.1% petroleum diesel to make it a “blend” and exporting the resulting fuel to Europe. The tax credit was intended to stimulate blending in the B5 to B20 range, but distributors are instead creating a B99.9 “blend” by adding one gallons of petroleum diesel per shipment of 1,000 gallons of biodiesel from Malaysia, and capturing the blending credit.

Europe has traditionally led the United States in biodiesel production, with France and Germany forming the two largest biodiesel consumer markets in the world.

The revelation of the tax loophole comes as trade delegations grapple with the convergence of the fuel and food markets. Food stocks have been traditionally subject to quotas and tariffs on a nearly global basis, and the impact of biofuel industry stimulants on tariff and trade policy is increasingly debated.

Free Subscription to the Daily Biofuels Digest e-newsletter

Related Stories

European groups call for ban on imported B99 from US

Europe's Renewable Energy Association is asking the UK's Department for Business Enterprise and Regulatory Reform and the European Union to ban cheap imported B99 biodiesel coming from the US. The gro...

European Biodiesel Board condemns subsidized US biodiesel exports; threatens anti-dumping, anti-subsidy complaint

The European Biodiesel Board (EBB) today launched a broadside against US biodiesel exporters, saying that "biodiesel producers are experiencing dumping competition from B99 blends. This competition is...

European industrial ethanol producers band to close ethanol import loophole

An article in Biofuel Review discusses efforts in the EU to close an ethanol import loophole. Importers are claiming that ethanol blends are subject to Chapter 38 of EU regulations, which exempt it f...

Iowa Senator leads effort to close loophole circumventing Brazilian ethanol tariff

In Washington, Sen. Chuck Grassley is leading an effort to close a loophole allowing oil companies to circumvent the tariff on Brazilian ethanol. The loophole allows oil companies to receive a rebate ...

Florida Governor Crist calls for reduction of Brazilian ethanol tariff

In Brazil, Florida governor Charlie Crist said that he opposed the Brazilian ethanol tariff and would lobby the state's Congressional delegation to reduce it.  The 54 cent per gallon tariff is sche...

Today in Biofuels Opinion: “What’s being called Son of Black Liquor dwarfs the original black-liquor loophole.”

From Dead Tree Edition: "For the second time in a year, the U.S. pulp and paper industry has hijacked a multi-billion dollar federal program that was supposed to promote new biofuels. What's being cal...