(The Center Square) – A $120 million tax credit for biodiesel producers and retail service stations will spur economic development in Missouri over a six-year period, according to a legislator’s bill creating the program.
“This is about economic development and it’s going to grow the Missouri economy while significantly reducing emissions,” said Rep. Mike Haffner, R-Pleasant Hill, of his legislation during a House agriculture committee hearing on Tuesday. “We’re the second-largest producer of biodiesel, producing upwards of 240 million gallons now. But not all of the fuel is being used here and there are multiple levels of marketplace influence that’s restricting opportunity.”
HB1875 creates $96 million in tax credits for Missouri service stations selling biodiesel-blended fuel and $24 million in tax credits for all biodiesel producers in the state. Missouri’s biodiesel production is rated third in the nation, producing 253 million gallons annually at its eight biodiesel plants, according to the U.S. Energy Information Administration. Testimony during the hearing included the future impact of electronic vehicles on the industry.
The bill provides a 2-cent per gallon tax credit for a biodiesel blend between 5 and 10% dispensed from metered pumps at retail service stations. It provides a 5-cent tax credit if the blend is 10% or higher. The bill also authorizes a 2-cent per gallon tax credit for Missouri biodiesel producers.
Both tax credits would begin on Jan. 1, 2023, and sunset on Dec. 31, 2028, unless reauthorized by the legislature. If the program is reauthorized, it will automatically sunset in 12 years.
If the tax credit exceeds the taxpayer’s tax liability, the difference will be refundable. The total amount of authorized tax credits for retail service stations cannot annually exceed $16 million, and the amount for biodiesel producers can’t surpass $4 million annually.
A biodiesel producer is defined in the bill as 51% owned by agricultural producers who are residents of Missouri and actively engaged in agricultural production for commercial purposes. At least 80% of the agricultural product for producing biodiesel must originate in Missouri.
Rep. Haffner said Missouri needs the legislation to promote the biodiesel market. He testified Oklahoma now has laws promoting the conversion of traditional diesel refineries to biodiesel.
“Those plants are located near or around the pipeline,” Rep. Haffner said. “Pretty soon, there’s going to be biodiesel coming through the pipeline into Missouri, but it’s not going to be Missouri biodiesel. We’re missing market opportunities. Every neighboring state is doing things to enhance their state revenue.”
No one testified against the bill during the hearing. Ron Leone, executive director of the Missouri Petroleum & Convenience Association, urged the committee to develop new strategies to assist the liquid fuels industry as it faces competition from electric vehicles.
“What I have been doing in my efforts is to try and get the liquid fuels industry, which in the past has been butting heads with others, to be on the same page,” Leone said. “As we transition to whatever is next – electric vehicles, hydrogen or whatever – the liquid fuels industry is working together and that we’re playing chess when everyone else is playing checkers. If we’re not together and we’re beating each other up over mandates, incentives and things like that, we may end up losing the entire game.”
Agriculture policy committee chairman Don Rone, R-Portageville, shared a personal story illustrating the limits of electric vehicles and the reliability of diesel engines on the farm.
“Probably no one here ever bought an electric hunting vehicle, but I bought one of the first,” Rone said. “Up in the hills, it’s great. But you take that electric vehicle into the rural community… put that electric vehicle in mud. I can’t tell you how many times I’ve had to push that electric vehicle to get it out of where I was hunting. You put that strain of gumbo mud onto an electric motor, that battery is going to wear down faster than… you’re going to be back with a tractor to pull it out.”