ACI Supports Bill to End Biofuel Subsidies

The American Cleaning Institute (ACI) welcomes legislation (HR 5004), introduced by U.S. Rep. Randy Weber (R-TX), that would eliminate tax credits for biofuels produced with animal fats. As part of the 2015 year-end legislative package of tax extenders, biodiesel and renewable diesel that is produced from animal fats is eligible for a $1 per gallon tax credit. The Joint Committee on Taxation estimates eliminating the tax credit for biofuels that use animal fats would save $299 million in fiscal year 2016.
 
“The American Cleaning Institute greatly appreciates Congressman Weber’s introduction of the Stop Animal Fat Tax Credits Act, which would provide much needed relief to the domestic oleochemical industry,” said Douglas Troutman, ACI General Counsel and Vice President, Government Affairs.“We are not opposed to biofuels. We are opposed to misguided government subsidies that negatively affect the price and availability of animal fats, a key feedstock for the oleochemical industry.”
 
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 towards the production of biodiesel. As a result, animal fats have seen a 116 percent increase in cost since 2006, the year the tax credit first became law.
 
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.
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, said ACI in its statement.