Legislation Introduced to Extend Biodiesel Tax Credit
A group of lawmakers on May 1, 2025, introduced the “Biodiesel Tax Credit Extension Act of 2025,” which would extend the “40A” biodiesel blender’s tax credit and the second-generation biofuel production credit through the end of 2026.
Taxpayers would be able to choose between claiming the Biodiesel Tax Credit or the ’45Z’ Clean Fuel Production Credit.
This legislation comes at a critical juncture, as diminishing renewable diesel and biodiesel volumes are intensifying industry concerns about the ability to meet customer demand. The expiration of the Biodiesel Tax Credit at the end of 2024 coupled with market uncertainty created by the new and complex ’45Z’ Clean Fuel Production Tax Credit has decimated biofuels supply chains, with renewable diesel and biodiesel volumes declining more than 58 percent this year.
The legislation is sponsored by Representative Mike Carey (R-Ohio) along with Representatives Andrew Garbarino (R-NY), Dusty Johnson (R-SD), Mike Kelly (R-PA), Darin LaHood (R-IL), Claudia Tenney (R-NY), and Mariannette Miller-Meeks (R-Iowa).
In a statement to media, 麻豆色播 said, 鈥淣ot only would this legislation inject much-needed certainty into biofuel markets, but it is easy to understand and to implement. For too long, too many people have been pursuing extraordinarily complicated policy solutions. It has only served to exacerbate uncertainty and market challenges. Simplicity is important.
鈥淲e commend Representative Carey, and all the lawmakers co-sponsoring this legislation, for recognizing the critical role that renewable diesel and biodiesel play in ensuring stable fuel supplies and lowering fuel costs for consumers by supporting an extension of the Biodiesel Blenders鈥� Tax Credit,鈥� David Fialkov, Executive Vice President of Government Affairs said. 鈥淲e urge Congress to extend this successful policy as soon as possible.鈥�
Since 2004, the Biodiesel Tax Credit has effectively spurred fuel retailers to invest in the necessary infrastructure to sell low-carbon alternative fuels while encouraging consumers to buy renewable fuel blends due to their lower cost. The biodiesel tax credit helps create jobs, reduce the transportation sector’s greenhouse gas emissions, and enables fuel retailers to offer more competitively priced diesel fuel.
The expiration of the Biodiesel Tax Credit at the end of 2024 coupled with market uncertainty created by the new and complex 鈥�45Z鈥� Clean Fuel Production Tax Credit has decimated biofuels supply chains. Many biofuel production facilities, particularly biodiesel plants, have scaled back or are shutting down entirely.
The Biodiesel Blender鈥檚 Tax Credit worked successfully to build a robust renewable diesel industry in the United States while decreasing carbon emissions associated with transportation fuel. The U.S. biodiesel and renewable diesel market had grown to approximately 4 billion gallons in 2023 from roughly 100 million gallons in 2005 before dropping precipitously in the first quarter of 2025.
Extending the Biodiesel Tax Credit will quickly mitigate biofuel supply concerns while also alleviating inflationary pressures on goods transported by truck.
A diverse group of stakeholders, including trucking fleets, shipping customers, and suppliers of home heating oil, support this policy because it lowers the price consumers pay to fuel their vehicles and heat their homes.
Biodiesel historically has been the most widely consumed biofuel for use in commercial trucking and represents the best opportunity to reduce carbon emissions from the nation鈥檚 commercial trucking fleet for the foreseeable future.
The Biodiesel Tax Credit lowers the price that truck drivers pay for diesel fuel, which in turn lowers the cost of shipping and therefore the price consumers pay for products that are moved by truck. Extending the biodiesel tax credit will safeguard the ability of motor carriers to reduce carbon emissions in the nation鈥檚 existing commercial fleets while lowering fuel prices and the cost of goods for consumers.
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