MORE “SPLASH AND DASH” BIODIESEL SCAM

International biodiesel producers hustled the U.S. taxpayer for $300 million dollars last year and are likely to do so to the tune of $600 million this year. They are taking advantage of a loophole in the U.S. subsidy of biodiesel popularly and disdainfully referred to as splash and dash. (See EU-U.S. BIOFUEL TRADE WAR?)

By adding 9000 gallons of U.S.-produced biodiesel to a 9 million gallon tankerful of foreign biodiesel, the foreign producers earn U.S. tax credits for the whole 9,009,000 gallons.

Congress cannot get the loophole closed because the National Biodiesel Board wants to sustain the subsidy to U.S. growers. The IRS cannot figure out which biodiesel tankers coming in and out of U.S. ports are splashing and dashing and which are doing legitimate business.

One thing is clear: More biodiesel is being exported from the U.S. than is being produced in the country so somebody is sending out millions and millions of gallons of biodiesel represented as U.S. product (and therefore earning hundreds of millions of dollars in U.S. tax credits) that is in fact foreign-produced biodiesel.

Having earned the U.S. subsidy, the tankers head to Europe where they dump their product at below market prices, thereby undercutting European producers and driving them out of the market.

Congressman John Shadegg (R-Ariz.): “Taxpayers should be outraged because they are subsidizing foreign consumers of biodiesel…That is insane, and it’s a ridiculous burden to put on American taxpayers.”

On the other hand, the biodiesel board sees an upside.

Manning Feraci, vice president of federal affairs at the National Biodiesel Board: “We’re creating jobs in rural America. We support over 20,000 jobs. And these are green jobs that are helping to address our energy security needs…”

If the U.S. Congress cannot resolve the matter, the E.U. parliament may. Their Trade Commissioner has already requested an investigation and is threatening a retaliatory tariff.

Splash and Dash

“Splash and Dash” Biodiesel Scam Costs Americans Millions
June 16, 2008 (National Center for Policy Analysis)
and
‘Splash and Dash’ Biofuel Scam Costs Americans Millions, Lawmakers Say
William LaJeunesse, June 16, 2008 (Fox News)

WHO
The U.S. taxpayer, Congressman John Shadegg (R-Ariz.); International and U.S. biodiesel producers; National Biodiesel Board (NBB); Internal Revenue Service (IRS)

WHAT
Splash and dash is earning foreign biodiesel producers hundred of millions of dollars in U.S. tax credits.

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WHEN
The practice has been going on since the B99 subsidy was implemented in 2004, costing U.S. taxpayers more each year.

WHERE
Most of the biodiesel that comes through U.S. ports for splash and dash treatment comes from palm oil sources in Asia and sugar cane sources in South America.

WHY
- The tax credit allowance was instituted to incentivize U.S. farmers to grow biodiesel crops that could be added to petrodiesel in 1% or 20% mixtures as a preservative.
- The profits reaped by exploiting U.S. subsidies is allowing foreign producers to sell in Europe, driving European producers out of business.
- The National Biodiesel Board has urged Congress to sustain the subsidy.

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QUOTES
- Congressman Shadegg: “In 2007 this subsidy cost the American taxpayer $300 million, and it’s projected to cost the American taxpayers $600 million next year… We really haven’t found out the names of the companies who are profiting from it…I think the bad actors are the members of Congress who are allowing this to happen.”
- Manning Feraci, vice president of federal affairs at the National Biodiesel Board: “Ultimately when you dig down it gets to the point that you would have to have access to IRS information…Taxpayer information is confidential, so we can’t have access to it…”