DIESEL TAX BOONDOGGLE?

When does a loophole become a boondoggle?

Tax break fuels a lobbying fight over alternative energy
Jim Snyder, May 24, 2007 (The Hill)

WHO
The IRS, oil giant ConocoPhillips (spokesman Bill Graham), Tyson Foods (and the National Pork Producers Council, the National Chicken Council), 54 congressional cosponsors including Rep. Lloyd Doggett (D-Texas) & Rep. Roy Blunt (R-Mo.), the Advanced Biofuels Coalition (manager Michael McAdams of Hart Energy)

WHAT
TheIRS ruled that a $1-a-gallon “renewable diesel” tax break applies to animal fat additives. Congress wants to repeal this section of the bill.

WHEN
The IRS ruling is based on a provision of the Energy Policy Act of 2005.

WHERE
The tax break is federal. The fight is in Washington, D.C.

WHY
- The provision was intended to support a process turning turkey offal into biofuel. A broader interpretation is being used for animal fat additives to petroleum. This could cost hundreds of millions in revenues as well as suppress small biodiesel producers.
- Tyson Foods supplies animal fats to Conoco for 175 million gallons of renewable diesel, therefore is eligible for the tax break.
- The tax break has inadvertently driven up the cost of animal fat, as oil companies seek it out as an additive to claim the incentive. This has driven up the cost of soap.
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QUOTES
- Graham: “…[If Congress’s intent was to] foster renewable technology innovation and commercialization, then there must be parity among the technologies and feedstocks that are going to be utilized…”
- Doggett: “…green-energy initiatives [become a] public boondoggle…”