Trucking wants Congress to renew biodiesel tax credit

Biofuels can help fleets reduce their carbon footprint in a sustainable way while letting them keep their traditional engines. For example, renewable diesel potentially reduces greenhouse gas emissions by 60 to 75% over the fuel’s lifecycle. But the price got higher at the end of 2024 when the ‘Section 40A Biodiesel Blenders’ Tax Credit (BTC), which incentivizes fuel retailers to buy and blend more biodiesel, expired.

Now, the trucking industry is banding together to get the tax credit renewed, prompting the House Ways and Means Committee to introduce the Biodiesel Tax Credit Extension Act of 2025. This legislation would extend 40A for two years at the blender level, allowing users to choose between claiming BTC or the ‘45Z’ Clean Fuel Production Credit.

The new bill was introduced by Congressman Mike Carey (R-Ohio) and Representatives Andrew Garbarino (R-NY), Dusty Johnson (R-SD), Mike Kelly (R-PA), Darin LaHood (R-IL), Claudia Tenney (R-NY), and Mariannette Miller-Meeks (R-Iowa).

A coalition of over 350 trucking fleets and shippers wrote on May 1 to the Ways and Means Committee, as well as the Senate Committee on Finance, to extend the BTC. The letter argued that continuing the credit would bring stability to the biofuel market, prevent higher fuel prices, and help carriers reduce carbon emissions in existing commercial fleets.

“For twenty years, this bipartisan tax credit has extended the diesel supply and imposed downward pressure on the price we pay for fuel,” the letter stated. “Without a renewal of the BTC, consumers could face higher costs not only for fuel but for everyday goods, from food and beverages to medicine.”

When the tax credit expired, biodiesel production plummeted by over 50%, according to the American Trucking Associations. Meanwhile, NATSO, SIGMA: America’s Leading Fuel Marketers, and the National Association of Convenience Stores (NACS) reported that total renewable diesel and biodiesel volumes declined by 58.5% after the expiration.

“This legislation comes at a critical juncture, as diminishing renewable diesel and biodiesel volumes are intensifying industry concerns about the ability to meet customer demand,” said David Fialkov, executive vice president of Government Affairs for NATSO and SIGMA. “Not only would this legislation inject much-needed certainty into biofuel markets, but it is easy to understand and to implement. We urge Congress to extend this successful policy as soon as possible.”

Growth of biofuels

Biodiesel is made using biological sources, such as vegetable oils and animal fats, that go through a chemical reaction with an alcohol. The fuel is approved for blending with petroleum diesel, and according to American Transportation Research Institute, fleets consumed almost two billion gallons of the fuel in 2023.

According to the National Association of Truck Stop Owners (NATSO), the total U.S. biodiesel and renewable diesel market reached 4 billion gallons that year. In 2005, it was only at 100 million gallons, so the biofuel market has seen nearly a 23% CAGR in that span.

That's still less than 10% of the 45 billion gallons of traditional diesel the EIA estimates the U.S. transportation sector consumes. If biofuels are expected to continue growing, and helping to drive down overall fuel costs, the incentive must be renewed, according to ATA.

“To continue our progress to sharply lower emissions, the trucking industry needs more affordable, technology-neutral solutions in the immediate term, including alternative fuels like biodiesel and renewable diesel,” said Henry Hanscom, ATA senior vice president of legislative affairs. “Extending the highly successful Biodiesel Tax Credit would expand access to these low-carbon, proven energy sources, dramatically reducing our environmental impact as well as transportation costs.”