- - Tuesday, December 17, 2019

Winter is here and millions of Americans must plan for seasonal home heating oil prices. Unfortunately, a turbulent energy market will make it difficult to do so. Multiple factors are affecting the cost of this vital fuel and its renewable fuel content, especially in the Mid-Atlantic and Northeast. Thankfully, Congress can alleviate some of this volatility immediately. It can vote to renew and extend the bipartisan biodiesel tax credit.

Biodiesel is a clean burning fuel made from either virgin vegetable oil or, as is often the case in our region, from recycled cooking oil. It can be blended with conventional heating oil to produce an even cleaner, greener and more efficient fuel, commonly referred-to as Bioheat. Bioheat is eligible for the biodiesel blender tax credit, which was first established in 2005 to incentivize investments in this renewable fuel. The credit has repeatedly lapsed in years past, but Congress has always renewed its commitment to the renewable fuels industry by extending it.

The credit last expired on Dec. 31, 2017, and has now been lapsed for nearly two years. Several bills pending in Congress would retroactively extend this important tax credit through 2020. Lawmakers have not yet acted on the legislation. If Congress fails to act, millions of Americans, particularly in the Northeast, will face continuing uncertainty about the use of renewable fuel to heat their homes.

In September, hundreds of Main Street family heating oil companies from across the Northeast met in Providence, Rhode Island, and announced a plan to transition from heating oil to a zero-carbon Renewable Liquid Heating Fuel in the coming decades. Heating oil, more than any other heat source, can be changed quickly and cost effectively to reduce greenhouse gas. Renewing and extending the biodiesel tax credit will help achieve these goals while simultaneously lowering home heating bills. That would be a win, win. But Congress must act.

The delay in extending the credit is already impacting supplies of biodiesel used to heat homes. Since it expired, the number of production facilities in the United States has declined from 101 in December 2018 to 95 in 2019. According to the U.S. Energy Information Administration, the nation’s production of biodiesel dropped 16 million gallons between August 2018 and August 2019.

Facilities have closed because of inaction on the tax credit. When Renewable Energy Group Inc. shuttered a facility in Texas earlier this year, its president and CEO, Cynthia J. Warner, said: “This closure comes today as a result of the poor economics over the last 18 months resulting in large part from the uncertainty surrounding the Biodiesel Tax Credit. Despite significant bipartisan support, Congress’ inaction on this value-added incentive has led to unsustainable market conditions.”

Just last month, another facility in Indiana was forced to close and lay off workers. Integrity Biofuels co-owner John Whittington said the lack of movement in Washington forced his hand. He said: “No one knows for sure if the credit will come back or if it will be retroactive if it is reinstated. This suppresses the market and only allows those who are willing to take a risk at the government’s roulette table and those who have the cash capabilities to wait for a possible reinstatement or retroactive tax credit.”

In the Northeast, American GreenFuels’ plant in Bridgeport, Connecticut, is now operating at half capacity, and World Energy has shuttered its Harrisburg, Pennsylvania, plant.

The renewal of the biodiesel tax credit is a key to a greener energy future. It also would spur domestic production and increase energy supplies at a critical time, especially as winter hits its full stride. In New England alone, more than 2 million homes and businesses — two out of every five — use heating oil as their primary source of warmth and comfort each winter. This is not an abstract discussion. The implications of congressional inaction are real. The biodiesel tax credit must be renewed and soon. Consumers and the Main Street heating oil companies that serve them are counting on policymakers to take this important step and provide relief at the very moment when it is needed most.

• Sean Cota is president and CEO of NEFI, a non-profit trade association that has served Main Street heating fuel distributors and home comfort providers since 1942.

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