07.03.17
Legislation introduced by US Rep. Randy Weber (R-TX) would permanently put a stop to federal tax credits for biofuels produced with animal fats, according to the American Cleaning Institute (ACI).
ACI, the trade association for the cleaning product supply chain, says the bill (HR 1866, the “Animal Fat Tax Credits Act”) would prevent the renewal of tax credits for biodiesel and renewable diesel that is produced from animal fats, which until the end of 2016 were eligible for a $1 per gallon tax credit.
“Congressman Weber’s bill would provide much needed relief to the domestic oleochemical industry,” said Jacob Cassady, ACI associate director, government affairs. “We believe this measure should be a part of any tax reform package that Congress looks at this year.”
Animal fats are the traditional feedstock for cleaning and personal care products such as laundry detergent, toothpaste, bar soap, bath gels and shampoos. Animal fats provide domestic chemical producers with a raw material that affords them a cost advantage over foreign manufacturers that use palm oil and similar materials as their primary feedstock. This industry supports approximately 25,000 American jobs.
ACI’s member companies include the producers of oleochemicals, such as fatty acids and alcohols made from seed oils and animal fats, which are historically used in soaps and detergents. The biofuel subsidy in question distorts the domestic market for animal fats by diverting this important raw material away from use in the manufacturing of cleaning products and toward the production of biodiesel. As a result, animal fats costs have increased 116% since 2006, the year the tax credit first became law.
The Joint Committee on Taxation estimated eliminating the tax credit for biofuels that use animal fats would have saved $299 million in fiscal year 2016.
The supply of animal fats in the US is largely inelastic (animals are raised for their meat, not fat), therefore the increased demand has rapidly outstripped supply, placing American cleaning product manufacturers at a tremendous market disadvantage, according to ACI.
ACI, the trade association for the cleaning product supply chain, says the bill (HR 1866, the “Animal Fat Tax Credits Act”) would prevent the renewal of tax credits for biodiesel and renewable diesel that is produced from animal fats, which until the end of 2016 were eligible for a $1 per gallon tax credit.
“Congressman Weber’s bill would provide much needed relief to the domestic oleochemical industry,” said Jacob Cassady, ACI associate director, government affairs. “We believe this measure should be a part of any tax reform package that Congress looks at this year.”
Animal fats are the traditional feedstock for cleaning and personal care products such as laundry detergent, toothpaste, bar soap, bath gels and shampoos. Animal fats provide domestic chemical producers with a raw material that affords them a cost advantage over foreign manufacturers that use palm oil and similar materials as their primary feedstock. This industry supports approximately 25,000 American jobs.
ACI’s member companies include the producers of oleochemicals, such as fatty acids and alcohols made from seed oils and animal fats, which are historically used in soaps and detergents. The biofuel subsidy in question distorts the domestic market for animal fats by diverting this important raw material away from use in the manufacturing of cleaning products and toward the production of biodiesel. As a result, animal fats costs have increased 116% since 2006, the year the tax credit first became law.
The Joint Committee on Taxation estimated eliminating the tax credit for biofuels that use animal fats would have saved $299 million in fiscal year 2016.
The supply of animal fats in the US is largely inelastic (animals are raised for their meat, not fat), therefore the increased demand has rapidly outstripped supply, placing American cleaning product manufacturers at a tremendous market disadvantage, according to ACI.