Biodiesel Subsidies & Renewable Energy Mandates: US Federal 2006

  1. Biodiesel Blenders Tax Credit
  2. Small Producer Tax Credit,
  3. USDA Commodity Credit Corporation (CCC)
  4. Renewable Fuel Standard (RFS)
  5. Energy Policy Act of 1992 (EPACT)
  6. Alternative Fuel Infrastructure Tax Credit
  7. Clean Fuels & Cities Program.
  8. Petroleum Violation Escrow Account
  9. Clean School Bus USA Program
  10. Clean Fuels Grant Program (Dept. of Transportation
  11. Federal Bio-Based Products Preferred Procurement Program
  12. USDA Renewable Energy Systems and Energy Efficiency Improvements Program
  13. Conservation Innovation Grant Program (CIG)
  14. USDA Value-Added Producer Grant Program

Biodiesel Blenders Tax Credit

This tax credit was established by the American Jobs Creation Act of 2004 and extended through 2008 by the Energy Policy Act of 2005. $1.00 per gallon from Virgin - $.50 for non-virgin sources.

Small Producer Tax Credit

This tax credit was introduced in the Energy Policy Act of 2005 and is available to producers of
biodiesel or ethanol with annual production of less than 60 million gallons. The tax credit is $0.10 per gallon for the first 15 million gallons of production (a maximum tax credit of $1.5 million per year).
The credit is due to expire on December 31, 2008. (International 2005; Moller 2005)

USDA Commodity Credit Corporation (CCC)

40% of feed stock costs paid for by this program. the USDA announced that the program was being terminated on July 31, 2006, due to lack of funding

Energy Policy Act of 1992 (EPACT)

This act, originally passed in 1992 and amended in 1998, had an announced goal of replacing 30% of petroleum fuels with non-petroleum fuels by 2010. (Energy 2006) The main tool employed to achieve this goal was a mandate to state and federal agencies to purchase non-petroleum powered vehicles. The act required that 75% of new lightduty vehicles purchased by federal fleets

Renewable Fuel Standard (RFS)

In January of 2004, the Department of Energy exempted private and local government fleets from these regulations. guidelines require that 2.78 percent of the fuel sold to consumers be generated from renewable sources. biodiesel qualify as renewable source.

Alternative Fuel Infrastructure Tax Credit

This tax credit was created by section 1342 of the Energy Policy Act of 2005. The tax credit is equal to 30% of the cost of alternative refueling property, up to a maximum of $30,000 for businesses and $1,000 for individuals. Biodiesel blends of B20 or more qualify as alternative fuels. The tax credit is effective for the period January 1, 2006 to December 31, 2009.

Clean Cities Program

The goal of the federal Clean Cities program is to promote environmental, economic and energy
security by supporting local programs to reduce petroleum consumption. Grants and fact sheets are supported by this program. The program also maintains data bases and offers technical support.

Petroleum Violation Escrow Account

Fines paid by oil companies from 1973 to 1981 for violations of federal oil price limits funded this account.
These monies are used for energy efficiency and renewable energy projects. For the most part, these funds are directed to State Energy and Weatherization Assistance programs. Over $4 billion have been distributed since this account’s inception. (Energy 2006)

Clean School Bus USA Program

This program offers cost sharing grants ($7.5 million in 2005) to school districts to upgrade their diesel fleets, including modifications that allow buses to run on biodiesel or for the purchase of new buses that run on biodiesel.
The main focus of this program is to reduce emissions and improve fuel economy. (Energy 2006)

Clean Fuels Grant Program (Dept. of Transportation)

This program is designed to promote the use of advanced bus technologies to reduce emissions.
The construction of alternative fuel stations and modifications to promote the utilization of biodiesel are covered by this program. (Energy 2006)

Federal Bio-Based Products Preferred Procurement Program

This program was established by the Farm Security and Rural Investment Act of 2002. The provisions of this program require federal agencies to purchase bio-based products over petroleum based products
This program also directs the U.S. Department of Agriculture to develop and implement a bio-based product designation. (USDA 2006)

USDA Renewable Energy Systems and Energy Efficiency Improvements Program

The Farm Security and Rural Investment Act of 2002 established this program, which offers grants and loan guarantees to eligible projects located in rural areas. Projects that generate energy from renewable sources (including biodiesel)
are eligible for grants of up to $500,000 and loan guarantees of up to $10,000,000. Grant requests are limited to 25% of the total project costs and loan guarantees are limited to 50% of the total project costs. Applicants must demonstrate financial need to be eligible for a grant from the program. (USDA 2006)

Conservation Innovation Grant Program (CIG)

This program is administered by the Natural Resource Conservation Service. Total funding available for the national portion of program is $20 million for fiscal year 2006. Eligible applicants are awarded grants of up to $1 million for projects that implement conservation innovations. Bio-based energy projects that maintain or improve air quality
are eligible under this program. (NRCS 2006)
The CIG program also allocates funds to be awarded at the state level. State level grants are limited to a maximum of $75,000. The state CIG programs may have different eligibility standards than the national portion of the program.
In fiscal year 2006, Montana distributed $645,000 from the state level CIG program. (Suffridge 2006)

USDA Value-Added Producer Grant Program

This program offers grants to producers, agricultural cooperatives and majority-controlled producer-based businesses for either planning activities or working capital expenses. The program requires that grant funds be matched at a minimum of a one to one ratio. An eligible project must qualify as a value-added project. Production of farm based biofuels would likely qualify for the program. This program handed out $19.5 million in fiscal year 2006. (USDA 2006)